Correlation Between FAST RETAIL and PARKEN Sport
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and PARKEN Sport 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 PARKEN Sport 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 PARKEN Sport Entertainment, you can compare the effects of market volatilities on FAST RETAIL and PARKEN Sport 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 PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and PARKEN Sport.
Diversification Opportunities for FAST RETAIL and PARKEN Sport
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FAST and PARKEN is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta 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 PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and PARKEN Sport go up and down completely randomly.
Pair Corralation between FAST RETAIL and PARKEN Sport
Assuming the 90 days trading horizon FAST RETAIL is expected to generate 3.09 times less return on investment than PARKEN Sport. But when comparing it to its historical volatility, FAST RETAIL ADR is 3.02 times less risky than PARKEN Sport. It trades about 0.06 of its potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 402.00 in PARKEN Sport Entertainment on September 3, 2024 and sell it today you would earn a total of 1,193 from holding PARKEN Sport Entertainment or generate 296.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. PARKEN Sport Entertainment
Performance |
| Timeline |
| FAST RETAIL ADR |
| PARKEN Sport Enterta |
FAST RETAIL and PARKEN Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and PARKEN Sport
The main advantage of trading using opposite FAST RETAIL and PARKEN Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, PARKEN Sport 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 PARKEN Sport will offset losses from the drop in PARKEN Sport's long position.| FAST RETAIL vs. JIAHUA STORES | FAST RETAIL vs. FEMALE HEALTH | FAST RETAIL vs. EPSILON HEALTHCARE LTD | FAST RETAIL vs. MARKET VECTR RETAIL |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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