Correlation Between SILEON AB and Fast Retailing

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

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

Diversification Opportunities for SILEON AB and Fast Retailing

-0.07

Correlation Coefficient

SILEON AB  Fast Retailing

Good diversification

The 3 months correlation between SILEON and Fast is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding SILEON AB ON and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and SILEON AB 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 SILEON AB ON 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 SILEON AB i.e., SILEON AB and Fast Retailing go up and down completely randomly.

Pair Corralation between SILEON AB and Fast Retailing

Assuming the 90 days trading horizon SILEON AB ON is expected to generate 142.64 times more return on investment than Fast Retailing. However, SILEON AB is 142.64 times more volatile than Fast Retailing Co. It trades about 0.23 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.08 per unit of risk. If you would invest  1,670  in SILEON AB ON on October 4, 2024 and sell it today you would lose (1,627) from holding SILEON AB ON or give up 97.43% of portfolio value over 90 days.

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

SILEON AB ON  vs.  Fast Retailing Co

SILEON AB ON

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SILEON AB ON are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SILEON AB reported solid returns over the last few months and may actually be approaching a breakup point.

Fast Retailing

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fast Retailing Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fast Retailing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SILEON AB and Fast Retailing

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

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.