Correlation Between FAST RETAIL and FIREWEED METALS

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

Diversification Opportunities for FAST RETAIL and FIREWEED METALS

0.31

Correlation Coefficient

FAST RETAIL  FIREWEED METALS

Weak diversification

The 3 months correlation between FAST and FIREWEED is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and FIREWEED METALS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIREWEED METALS P 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 FIREWEED METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIREWEED METALS P has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and FIREWEED METALS go up and down completely randomly.

Pair Corralation between FAST RETAIL and FIREWEED METALS

Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 0.74 times more return on investment than FIREWEED METALS. However, FAST RETAIL ADR is 1.36 times less risky than FIREWEED METALS. It trades about 0.0 of its potential returns per unit of risk. FIREWEED METALS P is currently generating about 0.0 per unit of risk. If you would invest  3,000  in FAST RETAIL ADR on October 24, 2024 and sell it today you would lose (20.00) from holding FAST RETAIL ADR or give up 0.67% of portfolio value over 90 days.

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

FAST RETAIL ADR  vs.  FIREWEED METALS P

FAST RETAIL ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

FIREWEED METALS P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIREWEED METALS P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FIREWEED METALS 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 RETAIL and FIREWEED METALS

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

The idea behind FAST RETAIL ADR and FIREWEED METALS P 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.