Correlation Between Fast Retailing and Genco Shipping

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

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

Diversification Opportunities for Fast Retailing and Genco Shipping

-0.29

Correlation Coefficient

Fast Retailing  Genco Shipping

Very good diversification

The 3 months correlation between Fast and Genco is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading and Fast Retailing 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 Fast Retailing Co are associated (or correlated) with Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of Fast Retailing i.e., Fast Retailing and Genco Shipping go up and down completely randomly.

Pair Corralation between Fast Retailing and Genco Shipping

Assuming the 90 days trading horizon Fast Retailing Co is expected to under-perform the Genco Shipping. But the stock apears to be less risky and, when comparing its historical volatility, Fast Retailing Co is 1.08 times less risky than Genco Shipping. The stock trades about -0.16 of its potential returns per unit of risk. The Genco Shipping Trading is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,412  in Genco Shipping Trading on October 10, 2024 and sell it today you would lose (20.00) from holding Genco Shipping Trading or give up 1.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Fast Retailing Co  vs.  Genco Shipping Trading

Fast Retailing

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fast Retailing Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Genco Shipping Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genco Shipping Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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 Fast Retailing and Genco Shipping

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

The idea behind Fast Retailing Co and Genco Shipping Trading 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.