Correlation Between Greentown Management and Fast Retailing

Can any of the company-specific risk be diversified away by investing in both Greentown Management and Fast Retailing 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 Greentown Management and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Greentown Management Holdings and Fast Retailing Co, you can compare the effects of market volatilities on Greentown Management and Fast Retailing 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 Greentown Management with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greentown Management and Fast Retailing.

Diversification Opportunities for Greentown Management and Fast Retailing

0.05

Correlation Coefficient

Greentown Management  Fast Retailing

Significant diversification

The 3 months correlation between Greentown and Fast is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Greentown Management Holdings and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Greentown Management 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 Greentown Management Holdings are associated (or correlated) with Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Greentown Management i.e., Greentown Management and Fast Retailing go up and down completely randomly.

Pair Corralation between Greentown Management and Fast Retailing

If you would invest  33,100  in Fast Retailing Co on October 7, 2024 and sell it today you would earn a total of  160.00  from holding Fast Retailing Co or generate 0.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.35%
Values	Daily Returns

Greentown Management Holdings  vs.  Fast Retailing Co

Greentown Management

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greentown Management Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, Greentown Management may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Greentown Management and Fast Retailing

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

The idea behind Greentown Management Holdings and Fast Retailing Co 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.