Correlation Between Fast Retailing and QINGCI GAMES

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

Diversification Opportunities for Fast Retailing and QINGCI GAMES

0.17

Correlation Coefficient

Fast Retailing  QINGCI GAMES

Average diversification

The 3 months correlation between Fast and QINGCI is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and QINGCI GAMES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QINGCI GAMES INC 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 QINGCI GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QINGCI GAMES INC has no effect on the direction of Fast Retailing i.e., Fast Retailing and QINGCI GAMES go up and down completely randomly.

Pair Corralation between Fast Retailing and QINGCI GAMES

Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 0.5 times more return on investment than QINGCI GAMES. However, Fast Retailing Co is 1.98 times less risky than QINGCI GAMES. It trades about 0.06 of its potential returns per unit of risk. QINGCI GAMES INC is currently generating about -0.01 per unit of risk. If you would invest  18,500  in Fast Retailing Co on October 20, 2024 and sell it today you would earn a total of  10,950  from holding Fast Retailing Co or generate 59.19% return on investment over 90 days.

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

Fast Retailing Co  vs.  QINGCI GAMES INC

Fast Retailing

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

QINGCI GAMES INC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QINGCI GAMES INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, QINGCI GAMES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fast Retailing and QINGCI GAMES

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

The idea behind Fast Retailing Co and QINGCI GAMES INC 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.