Correlation Between Wenzhou Kangning and Fast Retailing

Can any of the company-specific risk be diversified away by investing in both Wenzhou Kangning 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 Wenzhou Kangning and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wenzhou Kangning Hospital and Fast Retailing Co, you can compare the effects of market volatilities on Wenzhou Kangning 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 Wenzhou Kangning with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wenzhou Kangning and Fast Retailing.

Diversification Opportunities for Wenzhou Kangning and Fast Retailing

0.12

Correlation Coefficient

Wenzhou Kangning  Fast Retailing

Average diversification

The 3 months correlation between Wenzhou and Fast is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Wenzhou Kangning Hospital and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Wenzhou Kangning 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 Wenzhou Kangning Hospital 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 Wenzhou Kangning i.e., Wenzhou Kangning and Fast Retailing go up and down completely randomly.

Pair Corralation between Wenzhou Kangning and Fast Retailing

Assuming the 90 days trading horizon Wenzhou Kangning Hospital is expected to under-perform the Fast Retailing. But the stock apears to be less risky and, when comparing its historical volatility, Wenzhou Kangning Hospital is 1.28 times less risky than Fast Retailing. The stock trades about -0.13 of its potential returns per unit of risk. The Fast Retailing Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  29,980  in Fast Retailing Co on October 25, 2024 and sell it today you would lose (320.00) from holding Fast Retailing Co or give up 1.07% of portfolio value over 90 days.

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

Wenzhou Kangning Hospital  vs.  Fast Retailing Co

Wenzhou Kangning Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wenzhou Kangning Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fast Retailing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fast Retailing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Fast Retailing is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Wenzhou Kangning and Fast Retailing

The main advantage of trading using opposite Wenzhou Kangning and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wenzhou Kangning 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.

The idea behind Wenzhou Kangning Hospital and Fast Retailing Co 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.