Correlation Between FLOW TRADERS and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS 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 FLOW TRADERS and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and Fast Retailing Co, you can compare the effects of market volatilities on FLOW TRADERS 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 FLOW TRADERS with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and Fast Retailing.
Diversification Opportunities for FLOW TRADERS and Fast Retailing
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FLOW and Fast is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and FLOW TRADERS 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 FLOW TRADERS LTD 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 FLOW TRADERS i.e., FLOW TRADERS and Fast Retailing go up and down completely randomly.
Pair Corralation between FLOW TRADERS and Fast Retailing
Assuming the 90 days horizon FLOW TRADERS is expected to generate 5.56 times less return on investment than Fast Retailing. In addition to that, FLOW TRADERS is 1.07 times more volatile than Fast Retailing Co. It trades about 0.01 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about 0.06 per unit of volatility. If you would invest 24,200 in Fast Retailing Co on September 6, 2024 and sell it today you would earn a total of 8,880 from holding Fast Retailing Co or generate 36.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.74% |
Values | Daily Returns |
FLOW TRADERS LTD vs. Fast Retailing Co
Performance |
Timeline |
FLOW TRADERS LTD |
Fast Retailing |
FLOW TRADERS and Fast Retailing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FLOW TRADERS and Fast Retailing
The main advantage of trading using opposite FLOW TRADERS and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS 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.FLOW TRADERS vs. DEVRY EDUCATION GRP | FLOW TRADERS vs. Gamma Communications plc | FLOW TRADERS vs. Spirent Communications plc | FLOW TRADERS vs. Adtalem Global Education |
Fast Retailing vs. TOTAL GABON | Fast Retailing vs. Walgreens Boots Alliance | Fast Retailing vs. Peak Resources Limited |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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