Correlation Between Fast Retailing and Fresenius
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Fresenius 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 Fresenius 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 Fresenius SE Co, you can compare the effects of market volatilities on Fast Retailing and Fresenius 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 Fresenius. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Fresenius.
Diversification Opportunities for Fast Retailing and Fresenius
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fast and Fresenius is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Fresenius SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius SE 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 Fresenius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius SE has no effect on the direction of Fast Retailing i.e., Fast Retailing and Fresenius go up and down completely randomly.
Pair Corralation between Fast Retailing and Fresenius
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 1.13 times more return on investment than Fresenius. However, Fast Retailing is 1.13 times more volatile than Fresenius SE Co. It trades about 0.08 of its potential returns per unit of risk. Fresenius SE Co is currently generating about 0.05 per unit of risk. If you would invest 18,667 in Fast Retailing Co on September 12, 2024 and sell it today you would earn a total of 14,763 from holding Fast Retailing Co or generate 79.09% 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. Fresenius SE Co
Performance |
| Timeline |
| Fast Retailing |
| Fresenius SE |
Fast Retailing and Fresenius Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Fresenius
The main advantage of trading using opposite Fast Retailing and Fresenius positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Fresenius 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 Fresenius will offset losses from the drop in Fresenius' long position.| Fast Retailing vs. Mitsubishi Materials | Fast Retailing vs. Martin Marietta Materials | Fast Retailing vs. Infrastrutture Wireless Italiane | Fast Retailing vs. The Yokohama Rubber |
| Fresenius vs. AIR PRODCHEMICALS | Fresenius vs. SIDETRADE EO 1 | Fresenius vs. Fast Retailing Co | Fresenius vs. SHIN ETSU CHEMICAL |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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