Correlation Between Fast Retailing and AGF Management
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and AGF Management 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 AGF Management 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 AGF Management Limited, you can compare the effects of market volatilities on Fast Retailing and AGF Management 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 AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and AGF Management.
Diversification Opportunities for Fast Retailing and AGF Management
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fast and AGF is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management 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 AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Fast Retailing i.e., Fast Retailing and AGF Management go up and down completely randomly.
Pair Corralation between Fast Retailing and AGF Management
Assuming the 90 days trading horizon Fast Retailing Co is expected to under-perform the AGF Management. In addition to that, Fast Retailing is 1.06 times more volatile than AGF Management Limited. It trades about -0.13 of its total potential returns per unit of risk. AGF Management Limited is currently generating about 0.15 per unit of volatility. If you would invest 693.00 in AGF Management Limited on November 7, 2024 and sell it today you would earn a total of 37.00 from holding AGF Management Limited or generate 5.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. AGF Management Limited
Performance |
| Timeline |
| Fast Retailing |
| AGF Management |
Fast Retailing and AGF Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and AGF Management
The main advantage of trading using opposite Fast Retailing and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, AGF Management 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 AGF Management will offset losses from the drop in AGF Management'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 |
| AGF Management vs. Keck Seng Investments | AGF Management vs. Cleanaway Waste Management | AGF Management vs. SLR Investment Corp | AGF Management vs. British American Tobacco |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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