Correlation Between Gol Intelligent and FAST RETAIL

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

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

Diversification Opportunities for Gol Intelligent and FAST RETAIL

0.0

Correlation Coefficient

Gol Intelligent  FAST RETAIL

Pay attention - limited upside

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

Pair Corralation between Gol Intelligent and FAST RETAIL

Assuming the 90 days trading horizon Gol Intelligent Airlines is expected to under-perform the FAST RETAIL. In addition to that, Gol Intelligent is 4.32 times more volatile than FAST RETAIL ADR. It trades about -0.02 of its total potential returns per unit of risk. FAST RETAIL ADR is currently generating about 0.08 per unit of volatility. If you would invest  2,219  in FAST RETAIL ADR on October 5, 2024 and sell it today you would earn a total of  1,001  from holding FAST RETAIL ADR or generate 45.11% return on investment over 90 days.

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

Gol Intelligent Airlines  vs.  FAST RETAIL ADR

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

FAST RETAIL ADR

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days FAST RETAIL ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, FAST RETAIL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gol Intelligent and FAST RETAIL

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

The idea behind Gol Intelligent Airlines and FAST RETAIL ADR 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..