Correlation Between Fast Retailing and Hyrican Informationssyst

Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Hyrican Informationssyst 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 Hyrican Informationssyst 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 Hyrican Informationssysteme Aktiengesellschaft, you can compare the effects of market volatilities on Fast Retailing and Hyrican Informationssyst 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 Hyrican Informationssyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Hyrican Informationssyst.

Diversification Opportunities for Fast Retailing and Hyrican Informationssyst

0.7

Correlation Coefficient

Fast Retailing  Hyrican Informationssyst

Poor diversification

The 3 months correlation between Fast and Hyrican is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Hyrican Informationssysteme Ak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyrican Informationssyst 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 Hyrican Informationssyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyrican Informationssyst has no effect on the direction of Fast Retailing i.e., Fast Retailing and Hyrican Informationssyst go up and down completely randomly.

Pair Corralation between Fast Retailing and Hyrican Informationssyst

Assuming the 90 days trading horizon Fast Retailing Co is expected to under-perform the Hyrican Informationssyst. In addition to that, Fast Retailing is 5.85 times more volatile than Hyrican Informationssysteme Aktiengesellschaft. It trades about -0.14 of its total potential returns per unit of risk. Hyrican Informationssysteme Aktiengesellschaft is currently generating about -0.1 per unit of volatility. If you would invest  530.00  in Hyrican Informationssysteme Aktiengesellschaft on December 21, 2024 and sell it today you would lose (10.00) from holding Hyrican Informationssysteme Aktiengesellschaft or give up 1.89% of portfolio value over 90 days.

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

Fast Retailing Co  vs.  Hyrican Informationssysteme Ak

Fast Retailing

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hyrican Informationssyst

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hyrican Informationssysteme Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hyrican Informationssyst is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fast Retailing and Hyrican Informationssyst

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

The idea behind Fast Retailing Co and Hyrican Informationssysteme Aktiengesellschaft 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.