Correlation Between Fast Retailing and United Internet
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and United Internet 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 United Internet 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 United Internet AG, you can compare the effects of market volatilities on Fast Retailing and United Internet 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 United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and United Internet.
Diversification Opportunities for Fast Retailing and United Internet
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fast and United is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Fast Retailing i.e., Fast Retailing and United Internet go up and down completely randomly.
Pair Corralation between Fast Retailing and United Internet
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 0.79 times more return on investment than United Internet. However, Fast Retailing Co is 1.26 times less risky than United Internet. It trades about 0.04 of its potential returns per unit of risk. United Internet AG is currently generating about -0.02 per unit of risk. If you would invest 25,740 in Fast Retailing Co on December 5, 2024 and sell it today you would earn a total of 3,490 from holding Fast Retailing Co or generate 13.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Fast Retailing Co vs. United Internet AG
Performance |
Timeline |
Fast Retailing |
United Internet AG |
Fast Retailing and United Internet Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fast Retailing and United Internet
The main advantage of trading using opposite Fast Retailing and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, United Internet 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 United Internet will offset losses from the drop in United Internet's long position.Fast Retailing vs. Tower One Wireless | Fast Retailing vs. Iridium Communications | Fast Retailing vs. Tower Semiconductor | Fast Retailing vs. Taiwan Semiconductor Manufacturing |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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