Correlation Between FAST RETAIL and DBS GROUP

Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and DBS GROUP 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 RETAIL and DBS GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FAST RETAIL ADR and DBS GROUP HLDGS, you can compare the effects of market volatilities on FAST RETAIL and DBS GROUP 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 RETAIL with a short position of DBS GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and DBS GROUP.

Diversification Opportunities for FAST RETAIL and DBS GROUP

0.51

Correlation Coefficient

FAST RETAIL  DBS GROUP

Very weak diversification

The 3 months correlation between FAST and DBS is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and DBS GROUP HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBS GROUP HLDGS and FAST RETAIL 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 RETAIL ADR are associated (or correlated) with DBS GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBS GROUP HLDGS has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and DBS GROUP go up and down completely randomly.

Pair Corralation between FAST RETAIL and DBS GROUP

Assuming the 90 days trading horizon FAST RETAIL ADR is expected to under-perform the DBS GROUP. In addition to that, FAST RETAIL is 2.78 times more volatile than DBS GROUP HLDGS. It trades about -0.04 of its total potential returns per unit of risk. DBS GROUP HLDGS is currently generating about 0.13 per unit of volatility. If you would invest  3,091  in DBS GROUP HLDGS on October 10, 2024 and sell it today you would earn a total of  56.00  from holding DBS GROUP HLDGS or generate 1.81% return on investment over 90 days.

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

FAST RETAIL ADR  vs.  DBS GROUP HLDGS

FAST RETAIL ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FAST RETAIL ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FAST RETAIL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

DBS GROUP HLDGS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DBS GROUP HLDGS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, DBS GROUP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FAST RETAIL and DBS GROUP

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

The idea behind FAST RETAIL ADR and DBS GROUP HLDGS 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 CEOs Directory module to screen CEOs from public companies around the world.