Correlation Between Fast Retailing and Globe Trade
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Globe Trade 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 Globe Trade 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 Globe Trade Centre, you can compare the effects of market volatilities on Fast Retailing and Globe Trade 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 Globe Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Globe Trade.
Diversification Opportunities for Fast Retailing and Globe Trade
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fast and Globe is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Globe Trade Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Trade Centre 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 Globe Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Trade Centre has no effect on the direction of Fast Retailing i.e., Fast Retailing and Globe Trade go up and down completely randomly.
Pair Corralation between Fast Retailing and Globe Trade
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 9.92 times more return on investment than Globe Trade. However, Fast Retailing is 9.92 times more volatile than Globe Trade Centre. It trades about 0.05 of its potential returns per unit of risk. Globe Trade Centre is currently generating about -0.21 per unit of risk. If you would invest 30,890 in Fast Retailing Co on August 29, 2024 and sell it today you would earn a total of 610.00 from holding Fast Retailing Co or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Globe Trade Centre
Performance |
| Timeline |
| Fast Retailing |
| Globe Trade Centre |
Fast Retailing and Globe Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Globe Trade
The main advantage of trading using opposite Fast Retailing and Globe Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Globe Trade 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 Globe Trade will offset losses from the drop in Globe Trade's long position.| Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Superior Plus Corp | Fast Retailing vs. SIVERS SEMICONDUCTORS AB |
| Globe Trade vs. ANGI Homeservices | Globe Trade vs. Taylor Morrison Home | Globe Trade vs. DFS Furniture PLC | Globe Trade vs. Fast Retailing Co |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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