Correlation Between China Resources and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both China Resources 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 China Resources and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Beer and Fast Retailing Co, you can compare the effects of market volatilities on China Resources 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 China Resources with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Fast Retailing.
Diversification Opportunities for China Resources and Fast Retailing
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Fast is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and China Resources 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 China Resources Beer 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 China Resources i.e., China Resources and Fast Retailing go up and down completely randomly.
Pair Corralation between China Resources and Fast Retailing
Assuming the 90 days horizon China Resources Beer is expected to under-perform the Fast Retailing. In addition to that, China Resources is 1.79 times more volatile than Fast Retailing Co. It trades about -0.02 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 19,000 in Fast Retailing Co on November 6, 2024 and sell it today you would earn a total of 11,520 from holding Fast Retailing Co or generate 60.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. Fast Retailing Co
Performance |
| Timeline |
| China Resources Beer |
| Fast Retailing |
China Resources and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Fast Retailing
The main advantage of trading using opposite China Resources and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources 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.| China Resources vs. CARDINAL HEALTH | China Resources vs. Mount Gibson Iron | China Resources vs. TOMBADOR IRON LTD | China Resources vs. EPSILON HEALTHCARE LTD |
| Fast Retailing vs. AEON METALS LTD | Fast Retailing vs. IDP EDUCATION LTD | Fast Retailing vs. SIERRA METALS | Fast Retailing vs. Adtalem Global Education |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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