Correlation Between Xtep International and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Xtep International 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 Xtep International and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtep International Holdings and Fast Retailing Co, you can compare the effects of market volatilities on Xtep International 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 Xtep International with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtep International and Fast Retailing.
Diversification Opportunities for Xtep International and Fast Retailing
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Xtep and Fast is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Xtep International 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 Xtep International 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 Xtep International 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 Xtep International i.e., Xtep International and Fast Retailing go up and down completely randomly.
Pair Corralation between Xtep International and Fast Retailing
Assuming the 90 days horizon Xtep International Holdings is expected to generate 0.93 times more return on investment than Fast Retailing. However, Xtep International Holdings is 1.07 times less risky than Fast Retailing. It trades about -0.02 of its potential returns per unit of risk. Fast Retailing Co is currently generating about -0.11 per unit of risk. If you would invest 71.00 in Xtep International Holdings on October 20, 2024 and sell it today you would lose (1.00) from holding Xtep International Holdings or give up 1.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtep International Holdings vs. Fast Retailing Co
Performance |
| Timeline |
| Xtep International |
| Fast Retailing |
Xtep International and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtep International and Fast Retailing
The main advantage of trading using opposite Xtep International and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtep International 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.| Xtep International vs. Industria de Diseno | Xtep International vs. The TJX Companies | Xtep International vs. Fast Retailing Co | Xtep International vs. Lululemon Athletica |
| Fast Retailing vs. Industria de Diseno | Fast Retailing vs. The TJX Companies | Fast Retailing vs. Lululemon Athletica | Fast Retailing vs. NEXT plc |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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