Correlation Between Fast Retailing and 090572AR9

Can any of the company-specific risk be diversified away by investing in both Fast Retailing and 090572AR9 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 090572AR9 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 BIO 33 15 MAR 27, you can compare the effects of market volatilities on Fast Retailing and 090572AR9 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 090572AR9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and 090572AR9.

Diversification Opportunities for Fast Retailing and 090572AR9

0.24

Correlation Coefficient

Fast Retailing  090572AR9

Modest diversification

The 3 months correlation between Fast and 090572AR9 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and BIO 33 15 MAR 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIO 33 15 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 090572AR9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIO 33 15 has no effect on the direction of Fast Retailing i.e., Fast Retailing and 090572AR9 go up and down completely randomly.

Pair Corralation between Fast Retailing and 090572AR9

Assuming the 90 days horizon Fast Retailing Co is expected to generate 0.31 times more return on investment than 090572AR9. However, Fast Retailing Co is 3.18 times less risky than 090572AR9. It trades about -0.05 of its potential returns per unit of risk. BIO 33 15 MAR 27 is currently generating about -0.22 per unit of risk. If you would invest  33,590  in Fast Retailing Co on October 9, 2024 and sell it today you would lose (90.00) from holding Fast Retailing Co or give up 0.27% of portfolio value over 90 days.

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

Fast Retailing Co  vs.  BIO 33 15 MAR 27

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. Despite nearly stable basic indicators, Fast Retailing is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BIO 33 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BIO 33 15 MAR 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 090572AR9 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fast Retailing and 090572AR9

The main advantage of trading using opposite Fast Retailing and 090572AR9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, 090572AR9 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 090572AR9 will offset losses from the drop in 090572AR9's long position.

The idea behind Fast Retailing Co and BIO 33 15 MAR 27 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.