Correlation Between Tsuruha Holdings and LB Foster

Can any of the company-specific risk be diversified away by investing in both Tsuruha Holdings and LB Foster at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tsuruha Holdings and LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tsuruha Holdings and LB Foster, you can compare the effects of market volatilities on Tsuruha Holdings and LB Foster and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tsuruha Holdings with a short position of LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsuruha Holdings and LB Foster.

Diversification Opportunities for Tsuruha Holdings and LB Foster

0.6

Correlation Coefficient

Tsuruha Holdings  LB Foster

Poor diversification

The 3 months correlation between Tsuruha and FSTR is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tsuruha Holdings and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster and Tsuruha Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tsuruha Holdings are associated (or correlated) with LB Foster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Foster has no effect on the direction of Tsuruha Holdings i.e., Tsuruha Holdings and LB Foster go up and down completely randomly.

Pair Corralation between Tsuruha Holdings and LB Foster

Assuming the 90 days horizon Tsuruha Holdings is expected to under-perform the LB Foster. In addition to that, Tsuruha Holdings is 4.67 times more volatile than LB Foster. It trades about -0.07 of its total potential returns per unit of risk. LB Foster is currently generating about 0.09 per unit of volatility. If you would invest  968.00  in LB Foster on September 10, 2024 and sell it today you would earn a total of  1,928  from holding LB Foster or generate 199.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.61%
Values	Daily Returns

Tsuruha Holdings  vs.  LB Foster

Tsuruha Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsuruha Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tsuruha Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

LB Foster

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LB Foster are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, LB Foster reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tsuruha Holdings and LB Foster

The main advantage of trading using opposite Tsuruha Holdings and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsuruha Holdings position performs unexpectedly, LB Foster can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in LB Foster will offset losses from the drop in LB Foster's long position.

The idea behind Tsuruha Holdings and LB Foster pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.