Correlation Between Bellevue Life and Fast Retailing

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

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

Diversification Opportunities for Bellevue Life and Fast Retailing

-0.03

Correlation Coefficient

Bellevue Life  Fast Retailing

Good diversification

The 3 months correlation between Bellevue and Fast is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bellevue Life Sciences and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Bellevue Life 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 Bellevue Life Sciences 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 Bellevue Life i.e., Bellevue Life and Fast Retailing go up and down completely randomly.

Pair Corralation between Bellevue Life and Fast Retailing

Given the investment horizon of 90 days Bellevue Life Sciences is expected to under-perform the Fast Retailing. In addition to that, Bellevue Life is 1.02 times more volatile than Fast Retailing Co. It trades about -0.13 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about 0.02 per unit of volatility. If you would invest  33,100  in Fast Retailing Co on September 16, 2024 and sell it today you would earn a total of  160.00  from holding Fast Retailing Co or generate 0.48% return on investment over 90 days.

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

Bellevue Life Sciences  vs.  Fast Retailing Co

Bellevue Life Sciences

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bellevue Life Sciences are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Bellevue Life is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Fast Retailing

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fast Retailing Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fast Retailing is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bellevue Life and Fast Retailing

The main advantage of trading using opposite Bellevue Life and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bellevue Life 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 Bellevue Life Sciences 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.