Correlation Between FAST RETAIL and Gol Intelligent

Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and Gol Intelligent 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 Gol Intelligent 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 Gol Intelligent Airlines, you can compare the effects of market volatilities on FAST RETAIL and Gol Intelligent 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 Gol Intelligent. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and Gol Intelligent.

Diversification Opportunities for FAST RETAIL and Gol Intelligent

0.0

Correlation Coefficient

FAST RETAIL  Gol Intelligent

Pay attention - limited upside

The 3 months correlation between FAST and Gol is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Gol Intelligent Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gol Intelligent Airlines 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 Gol Intelligent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gol Intelligent Airlines has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Gol Intelligent go up and down completely randomly.

Pair Corralation between FAST RETAIL and Gol Intelligent

Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 0.26 times more return on investment than Gol Intelligent. However, FAST RETAIL ADR is 3.81 times less risky than Gol Intelligent. It trades about 0.07 of its potential returns per unit of risk. Gol Intelligent Airlines is currently generating about 0.0 per unit of risk. If you would invest  1,814  in FAST RETAIL ADR on September 20, 2024 and sell it today you would earn a total of  1,446  from holding FAST RETAIL ADR or generate 79.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

FAST RETAIL ADR  vs.  Gol Intelligent Airlines

FAST RETAIL ADR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FAST RETAIL ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FAST RETAIL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gol Intelligent Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gol Intelligent Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gol Intelligent is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FAST RETAIL and Gol Intelligent

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

The idea behind FAST RETAIL ADR and Gol Intelligent Airlines 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.