Correlation Between CARDINAL HEALTH and FUYO GENERAL

Can any of the company-specific risk be diversified away by investing in both CARDINAL HEALTH and FUYO GENERAL 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 CARDINAL HEALTH and FUYO GENERAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CARDINAL HEALTH and FUYO GENERAL LEASE, you can compare the effects of market volatilities on CARDINAL HEALTH and FUYO GENERAL 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 CARDINAL HEALTH with a short position of FUYO GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARDINAL HEALTH and FUYO GENERAL.

Diversification Opportunities for CARDINAL HEALTH and FUYO GENERAL

-0.6

Correlation Coefficient

CARDINAL HEALTH  FUYO GENERAL

Excellent diversification

The 3 months correlation between CARDINAL and FUYO is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and FUYO GENERAL LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUYO GENERAL LEASE and CARDINAL HEALTH 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 CARDINAL HEALTH are associated (or correlated) with FUYO GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUYO GENERAL LEASE has no effect on the direction of CARDINAL HEALTH i.e., CARDINAL HEALTH and FUYO GENERAL go up and down completely randomly.

Pair Corralation between CARDINAL HEALTH and FUYO GENERAL

Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 1.19 times more return on investment than FUYO GENERAL. However, CARDINAL HEALTH is 1.19 times more volatile than FUYO GENERAL LEASE. It trades about 0.21 of its potential returns per unit of risk. FUYO GENERAL LEASE is currently generating about -0.11 per unit of risk. If you would invest  11,819  in CARDINAL HEALTH on April 23, 2025 and sell it today you would earn a total of  1,951  from holding CARDINAL HEALTH or generate 16.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CARDINAL HEALTH  vs.  FUYO GENERAL LEASE

CARDINAL HEALTH

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CARDINAL HEALTH are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, CARDINAL HEALTH unveiled solid returns over the last few months and may actually be approaching a breakup point.

FUYO GENERAL LEASE

Risk-Adjusted Performance

Very Weak

Over the last 90 days FUYO GENERAL LEASE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CARDINAL HEALTH and FUYO GENERAL

The main advantage of trading using opposite CARDINAL HEALTH and FUYO GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARDINAL HEALTH position performs unexpectedly, FUYO GENERAL 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 FUYO GENERAL will offset losses from the drop in FUYO GENERAL's long position.

The idea behind CARDINAL HEALTH and FUYO GENERAL LEASE 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.