Correlation Between Fast Retailing and Genertec Universal
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Genertec Universal 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 Fast Retailing and Genertec Universal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and Genertec Universal Medical, you can compare the effects of market volatilities on Fast Retailing and Genertec Universal 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 Fast Retailing with a short position of Genertec Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Genertec Universal.
Diversification Opportunities for Fast Retailing and Genertec Universal
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fast and Genertec is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Genertec Universal Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genertec Universal and Fast Retailing 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 Fast Retailing Co are associated (or correlated) with Genertec Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genertec Universal has no effect on the direction of Fast Retailing i.e., Fast Retailing and Genertec Universal go up and down completely randomly.
Pair Corralation between Fast Retailing and Genertec Universal
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 0.6 times more return on investment than Genertec Universal. However, Fast Retailing Co is 1.66 times less risky than Genertec Universal. It trades about 0.06 of its potential returns per unit of risk. Genertec Universal Medical is currently generating about 0.02 per unit of risk. If you would invest 19,333 in Fast Retailing Co on November 7, 2024 and sell it today you would earn a total of 10,427 from holding Fast Retailing Co or generate 53.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Genertec Universal Medical
Performance |
| Timeline |
| Fast Retailing |
| Genertec Universal |
Fast Retailing and Genertec Universal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Genertec Universal
The main advantage of trading using opposite Fast Retailing and Genertec Universal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Genertec Universal 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 Genertec Universal will offset losses from the drop in Genertec Universal's long position.| Fast Retailing vs. AEON METALS LTD | Fast Retailing vs. IDP EDUCATION LTD | Fast Retailing vs. SIERRA METALS | Fast Retailing vs. Adtalem Global Education |
| Genertec Universal vs. COFCO Joycome Foods | Genertec Universal vs. CN MODERN DAIRY | Genertec Universal vs. AIR PRODCHEMICALS | Genertec Universal vs. SENECA FOODS A |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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