Correlation Between APERAM REG and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both APERAM REG 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 APERAM REG and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APERAM REG and Fast Retailing Co, you can compare the effects of market volatilities on APERAM REG 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 APERAM REG with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of APERAM REG and Fast Retailing.
Diversification Opportunities for APERAM REG and Fast Retailing
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between APERAM and Fast is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding APERAM REG and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and APERAM REG 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 APERAM REG 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 APERAM REG i.e., APERAM REG and Fast Retailing go up and down completely randomly.
Pair Corralation between APERAM REG and Fast Retailing
Assuming the 90 days trading horizon APERAM REG is expected to generate 1.26 times less return on investment than Fast Retailing. But when comparing it to its historical volatility, APERAM REG is 1.08 times less risky than Fast Retailing. It trades about 0.07 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 28,830 in Fast Retailing Co on September 3, 2024 and sell it today you would earn a total of 3,000 from holding Fast Retailing Co or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
APERAM REG vs. Fast Retailing Co
Performance |
| Timeline |
| APERAM REG |
| Fast Retailing |
APERAM REG and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APERAM REG and Fast Retailing
The main advantage of trading using opposite APERAM REG and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APERAM REG 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.| APERAM REG vs. Fast Retailing Co | APERAM REG vs. Citic Telecom International | APERAM REG vs. Iridium Communications | APERAM REG vs. Vastned Retail NV |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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