Correlation Between Fast Retailing and SINGAPORE AIRLINES
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and SINGAPORE AIRLINES 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 SINGAPORE AIRLINES 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 SINGAPORE AIRLINES, you can compare the effects of market volatilities on Fast Retailing and SINGAPORE AIRLINES 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 SINGAPORE AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and SINGAPORE AIRLINES.
Diversification Opportunities for Fast Retailing and SINGAPORE AIRLINES
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fast and SINGAPORE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and SINGAPORE AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE AIRLINES 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 SINGAPORE AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINGAPORE AIRLINES has no effect on the direction of Fast Retailing i.e., Fast Retailing and SINGAPORE AIRLINES go up and down completely randomly.
Pair Corralation between Fast Retailing and SINGAPORE AIRLINES
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 1.44 times more return on investment than SINGAPORE AIRLINES. However, Fast Retailing is 1.44 times more volatile than SINGAPORE AIRLINES. It trades about 0.15 of its potential returns per unit of risk. SINGAPORE AIRLINES is currently generating about 0.06 per unit of risk. If you would invest 27,950 in Fast Retailing Co on September 12, 2024 and sell it today you would earn a total of 5,480 from holding Fast Retailing Co or generate 19.61% 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. SINGAPORE AIRLINES
Performance |
| Timeline |
| Fast Retailing |
| SINGAPORE AIRLINES |
Fast Retailing and SINGAPORE AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and SINGAPORE AIRLINES
The main advantage of trading using opposite Fast Retailing and SINGAPORE AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, SINGAPORE AIRLINES 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 SINGAPORE AIRLINES will offset losses from the drop in SINGAPORE AIRLINES's 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 |
| SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES vs. Apple Inc | SINGAPORE AIRLINES 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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