Correlation Between Fast Retailing and Ceres Power
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Ceres Power 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 Ceres Power 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 Ceres Power Holdings, you can compare the effects of market volatilities on Fast Retailing and Ceres Power 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 Ceres Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Ceres Power.
Diversification Opportunities for Fast Retailing and Ceres Power
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fast and Ceres is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Ceres Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceres Power Holdings 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 Ceres Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceres Power Holdings has no effect on the direction of Fast Retailing i.e., Fast Retailing and Ceres Power go up and down completely randomly.
Pair Corralation between Fast Retailing and Ceres Power
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 0.47 times more return on investment than Ceres Power. However, Fast Retailing Co is 2.13 times less risky than Ceres Power. It trades about 0.0 of its potential returns per unit of risk. Ceres Power Holdings is currently generating about -0.13 per unit of risk. If you would invest 29,980 in Fast Retailing Co on October 25, 2024 and sell it today you would lose (320.00) from holding Fast Retailing Co or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Ceres Power Holdings
Performance |
| Timeline |
| Fast Retailing |
| Ceres Power Holdings |
Fast Retailing and Ceres Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Ceres Power
The main advantage of trading using opposite Fast Retailing and Ceres Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Ceres Power 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 Ceres Power will offset losses from the drop in Ceres Power's long position.| Fast Retailing vs. GEAR4MUSIC LS 10 | Fast Retailing vs. VELA TECHNOLPLC LS 0001 | Fast Retailing vs. AXWAY SOFTWARE EO | Fast Retailing vs. Tencent Music Entertainment |
| Ceres Power vs. Delta Electronics Public | Ceres Power vs. Plug Power | Ceres Power vs. Varta AG | Ceres Power vs. Bloom Energy |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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