Correlation Between Fast Retailing and Xtep International
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Xtep International 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 Xtep International 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 Xtep International Holdings, you can compare the effects of market volatilities on Fast Retailing and Xtep International 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 Xtep International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Xtep International.
Diversification Opportunities for Fast Retailing and Xtep International
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fast and Xtep is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Xtep International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtep International 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 Xtep International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtep International has no effect on the direction of Fast Retailing i.e., Fast Retailing and Xtep International go up and down completely randomly.
Pair Corralation between Fast Retailing and Xtep International
Assuming the 90 days horizon Fast Retailing Co is expected to under-perform the Xtep International. In addition to that, Fast Retailing is 1.42 times more volatile than Xtep International Holdings. It trades about -0.13 of its total potential returns per unit of risk. Xtep International Holdings is currently generating about 0.28 per unit of volatility. If you would invest 67.00 in Xtep International Holdings on November 2, 2024 and sell it today you would earn a total of 6.00 from holding Xtep International Holdings or generate 8.96% 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. Xtep International Holdings
Performance |
| Timeline |
| Fast Retailing |
| Xtep International |
Fast Retailing and Xtep International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Xtep International
The main advantage of trading using opposite Fast Retailing and Xtep International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Xtep International 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 Xtep International will offset losses from the drop in Xtep International's long position.| Fast Retailing vs. The TJX Companies | Fast Retailing vs. Lululemon Athletica | Fast Retailing vs. Urban Outfitters | Fast Retailing vs. Superior Plus Corp |
| Xtep International vs. VULCAN MATERIALS | Xtep International vs. Compagnie Plastic Omnium | Xtep International vs. Charter Communications | Xtep International vs. Cairo Communication SpA |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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