Correlation Between FAST RETAIL and H FARM
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and H FARM 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 H FARM 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 H FARM SPA, you can compare the effects of market volatilities on FAST RETAIL and H FARM 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 H FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and H FARM.
Diversification Opportunities for FAST RETAIL and H FARM
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between FAST and 5JQ is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA 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 H FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and H FARM go up and down completely randomly.
Pair Corralation between FAST RETAIL and H FARM
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to under-perform the H FARM. But the stock apears to be less risky and, when comparing its historical volatility, FAST RETAIL ADR is 5.07 times less risky than H FARM. The stock trades about -0.15 of its potential returns per unit of risk. The H FARM SPA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 12.00 in H FARM SPA on October 20, 2024 and sell it today you would earn a total of 1.00 from holding H FARM SPA or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
FAST RETAIL ADR vs. H FARM SPA
Performance |
| Timeline |
| FAST RETAIL ADR |
| H FARM SPA |
FAST RETAIL and H FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and H FARM
The main advantage of trading using opposite FAST RETAIL and H FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, H FARM 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 H FARM will offset losses from the drop in H FARM's long position.| FAST RETAIL vs. Siamgas And Petrochemicals | FAST RETAIL vs. Soken Chemical Engineering | FAST RETAIL vs. Sekisui Chemical Co | FAST RETAIL vs. X FAB Silicon Foundries |
| H FARM vs. SMA Solar Technology | H FARM vs. Alfa Financial Software | H FARM vs. Vishay Intertechnology | H FARM vs. Yanzhou Coal Mining |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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