Correlation Between FAST RETAIL and Chongqing Machinery
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and Chongqing Machinery 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 Chongqing Machinery 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 Chongqing Machinery Electric, you can compare the effects of market volatilities on FAST RETAIL and Chongqing Machinery 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 Chongqing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and Chongqing Machinery.
Diversification Opportunities for FAST RETAIL and Chongqing Machinery
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FAST and Chongqing is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Chongqing Machinery Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Machinery 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 Chongqing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Machinery has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Chongqing Machinery go up and down completely randomly.
Pair Corralation between FAST RETAIL and Chongqing Machinery
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to under-perform the Chongqing Machinery. But the stock apears to be less risky and, when comparing its historical volatility, FAST RETAIL ADR is 5.75 times less risky than Chongqing Machinery. The stock trades about -0.14 of its potential returns per unit of risk. The Chongqing Machinery Electric is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 8.40 in Chongqing Machinery Electric on November 3, 2024 and sell it today you would lose (0.95) from holding Chongqing Machinery Electric or give up 11.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. Chongqing Machinery Electric
Performance |
| Timeline |
| FAST RETAIL ADR |
| Chongqing Machinery |
FAST RETAIL and Chongqing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and Chongqing Machinery
The main advantage of trading using opposite FAST RETAIL and Chongqing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, Chongqing Machinery 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 Chongqing Machinery will offset losses from the drop in Chongqing Machinery's long position.The idea behind FAST RETAIL ADR and Chongqing Machinery Electric pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Chongqing Machinery vs. MONEYSUPERMARKET | Chongqing Machinery vs. TEXAS ROADHOUSE | Chongqing Machinery vs. TRAINLINE PLC LS | Chongqing Machinery vs. EVS Broadcast Equipment |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |