Correlation Between FAST RETAIL and BlueScope Steel
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and BlueScope Steel 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 BlueScope Steel 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 BlueScope Steel Limited, you can compare the effects of market volatilities on FAST RETAIL and BlueScope Steel 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 BlueScope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and BlueScope Steel.
Diversification Opportunities for FAST RETAIL and BlueScope Steel
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FAST and BlueScope is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and BlueScope Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueScope Steel 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 BlueScope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueScope Steel has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and BlueScope Steel go up and down completely randomly.
Pair Corralation between FAST RETAIL and BlueScope Steel
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 1.02 times more return on investment than BlueScope Steel. However, FAST RETAIL is 1.02 times more volatile than BlueScope Steel Limited. It trades about 0.04 of its potential returns per unit of risk. BlueScope Steel Limited is currently generating about 0.01 per unit of risk. If you would invest 2,270 in FAST RETAIL ADR on December 11, 2024 and sell it today you would earn a total of 550.00 from holding FAST RETAIL ADR or generate 24.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. BlueScope Steel Limited
Performance |
| Timeline |
| FAST RETAIL ADR |
| BlueScope Steel |
FAST RETAIL and BlueScope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and BlueScope Steel
The main advantage of trading using opposite FAST RETAIL and BlueScope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, BlueScope Steel 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 BlueScope Steel will offset losses from the drop in BlueScope Steel's long position.| FAST RETAIL vs. Globex Mining Enterprises | ||
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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