Correlation Between Fast Retailing and SHELF DRILLING
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and SHELF DRILLING 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 SHELF DRILLING 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 SHELF DRILLING LTD, you can compare the effects of market volatilities on Fast Retailing and SHELF DRILLING 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 SHELF DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and SHELF DRILLING.
Diversification Opportunities for Fast Retailing and SHELF DRILLING
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fast and SHELF is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and SHELF DRILLING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHELF DRILLING LTD 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 SHELF DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHELF DRILLING LTD has no effect on the direction of Fast Retailing i.e., Fast Retailing and SHELF DRILLING go up and down completely randomly.
Pair Corralation between Fast Retailing and SHELF DRILLING
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 0.45 times more return on investment than SHELF DRILLING. However, Fast Retailing Co is 2.22 times less risky than SHELF DRILLING. It trades about 0.05 of its potential returns per unit of risk. SHELF DRILLING LTD is currently generating about -0.12 per unit of risk. If you would invest 28,410 in Fast Retailing Co on August 25, 2024 and sell it today you would earn a total of 1,570 from holding Fast Retailing Co or generate 5.53% 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. SHELF DRILLING LTD
Performance |
| Timeline |
| Fast Retailing |
| SHELF DRILLING LTD |
Fast Retailing and SHELF DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and SHELF DRILLING
The main advantage of trading using opposite Fast Retailing and SHELF DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, SHELF DRILLING 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 SHELF DRILLING will offset losses from the drop in SHELF DRILLING's long position.| Fast Retailing vs. Autohome ADR | Fast Retailing vs. KB HOME | Fast Retailing vs. Sqs Software Quality | Fast Retailing vs. Alfa Financial Software |
| SHELF DRILLING vs. Qurate Retail Series | SHELF DRILLING vs. MARKET VECTR RETAIL | SHELF DRILLING vs. Fast Retailing Co | SHELF DRILLING vs. INTER CARS SA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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