Correlation Between Fast Retailing and AEON STORES
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and AEON STORES 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 AEON STORES 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 AEON STORES, you can compare the effects of market volatilities on Fast Retailing and AEON STORES 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 AEON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and AEON STORES.
Diversification Opportunities for Fast Retailing and AEON STORES
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fast and AEON is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and AEON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON STORES 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 AEON STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON STORES has no effect on the direction of Fast Retailing i.e., Fast Retailing and AEON STORES go up and down completely randomly.
Pair Corralation between Fast Retailing and AEON STORES
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 0.58 times more return on investment than AEON STORES. However, Fast Retailing Co is 1.73 times less risky than AEON STORES. It trades about 0.08 of its potential returns per unit of risk. AEON STORES is currently generating about 0.0 per unit of risk. If you would invest 18,667 in Fast Retailing Co on September 13, 2024 and sell it today you would earn a total of 14,953 from holding Fast Retailing Co or generate 80.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. AEON STORES
Performance |
| Timeline |
| Fast Retailing |
| AEON STORES |
Fast Retailing and AEON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and AEON STORES
The main advantage of trading using opposite Fast Retailing and AEON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, AEON STORES 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 AEON STORES will offset losses from the drop in AEON STORES's long position.| Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc |
| AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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