Correlation Between Fast Retailing and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and FLOW TRADERS 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 FLOW TRADERS 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 FLOW TRADERS LTD, you can compare the effects of market volatilities on Fast Retailing and FLOW TRADERS 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 FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and FLOW TRADERS.
Diversification Opportunities for Fast Retailing and FLOW TRADERS
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fast and FLOW is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of Fast Retailing i.e., Fast Retailing and FLOW TRADERS go up and down completely randomly.
Pair Corralation between Fast Retailing and FLOW TRADERS
Assuming the 90 days trading horizon Fast Retailing Co is expected to under-perform the FLOW TRADERS. But the stock apears to be less risky and, when comparing its historical volatility, Fast Retailing Co is 1.05 times less risky than FLOW TRADERS. The stock trades about -0.15 of its potential returns per unit of risk. The FLOW TRADERS LTD is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,152 in FLOW TRADERS LTD on November 2, 2024 and sell it today you would earn a total of 180.00 from holding FLOW TRADERS LTD or generate 8.36% 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. FLOW TRADERS LTD
Performance |
| Timeline |
| Fast Retailing |
| FLOW TRADERS LTD |
Fast Retailing and FLOW TRADERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and FLOW TRADERS
The main advantage of trading using opposite Fast Retailing and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS's long position.| Fast Retailing vs. Singapore Airlines Limited | Fast Retailing vs. GMO Internet | Fast Retailing vs. Fortescue Metals Group | Fast Retailing vs. Spirent Communications plc |
| FLOW TRADERS vs. PACIFIC ONLINE | FLOW TRADERS vs. CODERE ONLINE LUX | FLOW TRADERS vs. HEALTHSTREAM | FLOW TRADERS vs. PURETECH HEALTH PLC |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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