Correlation Between Fast Retailing and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Superior Plus 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 Superior Plus 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 Superior Plus Corp, you can compare the effects of market volatilities on Fast Retailing and Superior Plus 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 Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Superior Plus.
Diversification Opportunities for Fast Retailing and Superior Plus
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fast and Superior is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp 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 Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Fast Retailing i.e., Fast Retailing and Superior Plus go up and down completely randomly.
Pair Corralation between Fast Retailing and Superior Plus
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 0.56 times more return on investment than Superior Plus. However, Fast Retailing Co is 1.8 times less risky than Superior Plus. It trades about 0.05 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.04 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Superior Plus Corp
Performance |
| Timeline |
| Fast Retailing |
| Superior Plus Corp |
Fast Retailing and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Superior Plus
The main advantage of trading using opposite Fast Retailing and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| Fast Retailing vs. Autohome ADR | Fast Retailing vs. KB HOME | Fast Retailing vs. Sqs Software Quality | Fast Retailing vs. Alfa Financial Software |
| Superior Plus vs. Fast Retailing Co | Superior Plus vs. Auto Trader Group | Superior Plus vs. Monster Beverage Corp | Superior Plus vs. Suntory Beverage Food |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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