Correlation Between Chiba Bank and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both Chiba Bank and FAST RETAIL 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 Chiba Bank and FAST RETAIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiba Bank and FAST RETAIL ADR, you can compare the effects of market volatilities on Chiba Bank and FAST RETAIL 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 Chiba Bank with a short position of FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and FAST RETAIL.
Diversification Opportunities for Chiba Bank and FAST RETAIL
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chiba and FAST is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR and Chiba Bank 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 Chiba Bank are associated (or correlated) with FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of Chiba Bank i.e., Chiba Bank and FAST RETAIL go up and down completely randomly.
Pair Corralation between Chiba Bank and FAST RETAIL
Assuming the 90 days horizon Chiba Bank is expected to generate 0.63 times more return on investment than FAST RETAIL. However, Chiba Bank is 1.59 times less risky than FAST RETAIL. It trades about 0.18 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about -0.24 per unit of risk. If you would invest 735.00 in Chiba Bank on October 25, 2024 and sell it today you would earn a total of 30.00 from holding Chiba Bank or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chiba Bank vs. FAST RETAIL ADR
Performance |
| Timeline |
| Chiba Bank |
| FAST RETAIL ADR |
Chiba Bank and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chiba Bank and FAST RETAIL
The main advantage of trading using opposite Chiba Bank and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank position performs unexpectedly, FAST RETAIL 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 RETAIL will offset losses from the drop in FAST RETAIL's long position.The idea behind Chiba Bank and FAST RETAIL ADR 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.| FAST RETAIL vs. BANKINTER ADR 2007 | FAST RETAIL vs. AUSNUTRIA DAIRY | FAST RETAIL vs. SUN LIFE FINANCIAL | FAST RETAIL vs. Chiba Bank |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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