Correlation Between FAST RETAIL and Tiangong International
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and Tiangong 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 RETAIL and Tiangong International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAST RETAIL ADR and Tiangong International, you can compare the effects of market volatilities on FAST RETAIL and Tiangong 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 RETAIL with a short position of Tiangong International. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and Tiangong International.
Diversification Opportunities for FAST RETAIL and Tiangong International
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FAST and Tiangong is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Tiangong International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiangong International and FAST RETAIL 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 RETAIL ADR are associated (or correlated) with Tiangong International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiangong International has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Tiangong International go up and down completely randomly.
Pair Corralation between FAST RETAIL and Tiangong International
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 0.45 times more return on investment than Tiangong International. However, FAST RETAIL ADR is 2.23 times less risky than Tiangong International. It trades about 0.06 of its potential returns per unit of risk. Tiangong International is currently generating about 0.02 per unit of risk. If you would invest 1,765 in FAST RETAIL ADR on October 23, 2024 and sell it today you would earn a total of 1,195 from holding FAST RETAIL ADR or generate 67.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. Tiangong International
Performance |
| Timeline |
| FAST RETAIL ADR |
| Tiangong International |
FAST RETAIL and Tiangong International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and Tiangong International
The main advantage of trading using opposite FAST RETAIL and Tiangong International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, Tiangong 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 Tiangong International will offset losses from the drop in Tiangong International's long position.| FAST RETAIL vs. Ross Stores | FAST RETAIL vs. Designer Brands | FAST RETAIL vs. Genesco | FAST RETAIL vs. Stitch Fix |
| Tiangong International vs. Tradeweb Markets | Tiangong International vs. Canon Marketing Japan | Tiangong International vs. FAST RETAIL ADR | Tiangong International vs. SIDETRADE EO 1 |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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