Correlation Between Qingdao Haier and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Qingdao Haier 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 Qingdao Haier and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qingdao Haier Co and Fast Retailing Co, you can compare the effects of market volatilities on Qingdao Haier 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 Qingdao Haier with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingdao Haier and Fast Retailing.
Diversification Opportunities for Qingdao Haier and Fast Retailing
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Qingdao and Fast is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Haier Co and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Qingdao Haier 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 Qingdao Haier Co 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 Qingdao Haier i.e., Qingdao Haier and Fast Retailing go up and down completely randomly.
Pair Corralation between Qingdao Haier and Fast Retailing
Assuming the 90 days trading horizon Qingdao Haier is expected to generate 2.27 times less return on investment than Fast Retailing. In addition to that, Qingdao Haier is 1.23 times more volatile than Fast Retailing Co. It trades about 0.11 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about 0.3 per unit of volatility. If you would invest 29,920 in Fast Retailing Co on September 12, 2024 and sell it today you would earn a total of 3,510 from holding Fast Retailing Co or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qingdao Haier Co vs. Fast Retailing Co
Performance |
| Timeline |
| Qingdao Haier |
| Fast Retailing |
Qingdao Haier and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qingdao Haier and Fast Retailing
The main advantage of trading using opposite Qingdao Haier and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qingdao Haier 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.| Qingdao Haier vs. Federal Agricultural Mortgage | Qingdao Haier vs. PRECISION DRILLING P | Qingdao Haier vs. Chiba Bank | Qingdao Haier vs. VIRG NATL BANKSH |
| Fast Retailing vs. Mitsubishi Materials | Fast Retailing vs. Martin Marietta Materials | Fast Retailing vs. Infrastrutture Wireless Italiane | Fast Retailing vs. The Yokohama Rubber |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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