Correlation Between G8 EDUCATION and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both G8 EDUCATION and Fast Retailing 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 G8 EDUCATION and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 EDUCATION and Fast Retailing Co, you can compare the effects of market volatilities on G8 EDUCATION and Fast Retailing 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 G8 EDUCATION with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 EDUCATION and Fast Retailing.
Diversification Opportunities for G8 EDUCATION and Fast Retailing
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 3EAG and Fast is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding G8 EDUCATION and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and G8 EDUCATION 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 G8 EDUCATION are associated (or correlated) with Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of G8 EDUCATION i.e., G8 EDUCATION and Fast Retailing go up and down completely randomly.
Pair Corralation between G8 EDUCATION and Fast Retailing
Assuming the 90 days trading horizon G8 EDUCATION is expected to generate 0.8 times more return on investment than Fast Retailing. However, G8 EDUCATION is 1.24 times less risky than Fast Retailing. It trades about -0.16 of its potential returns per unit of risk. Fast Retailing Co is currently generating about -0.16 per unit of risk. If you would invest 81.00 in G8 EDUCATION on October 11, 2024 and sell it today you would lose (4.00) from holding G8 EDUCATION or give up 4.94% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
G8 EDUCATION vs. Fast Retailing Co
Performance |
Timeline |
G8 EDUCATION |
Fast Retailing |
G8 EDUCATION and Fast Retailing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with G8 EDUCATION and Fast Retailing
The main advantage of trading using opposite G8 EDUCATION and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 EDUCATION position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.G8 EDUCATION vs. VIVA WINE GROUP | G8 EDUCATION vs. SAN MIGUEL BREWERY | G8 EDUCATION vs. Ebro Foods SA | G8 EDUCATION vs. Molson Coors Beverage |
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Check out your portfolio center.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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