Correlation Between FAST RETAIL and DONGJIANG ENVIRONMENTAL
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL H, you can compare the effects of market volatilities on FAST RETAIL and DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and DONGJIANG ENVIRONMENTAL.
Diversification Opportunities for FAST RETAIL and DONGJIANG ENVIRONMENTAL
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FAST and DONGJIANG is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and DONGJIANG ENVIRONMENTAL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONGJIANG ENVIRONMENTAL has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and DONGJIANG ENVIRONMENTAL go up and down completely randomly.
Pair Corralation between FAST RETAIL and DONGJIANG ENVIRONMENTAL
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 0.48 times more return on investment than DONGJIANG ENVIRONMENTAL. However, FAST RETAIL ADR is 2.1 times less risky than DONGJIANG ENVIRONMENTAL. It trades about 0.06 of its potential returns per unit of risk. DONGJIANG ENVIRONMENTAL H is currently generating about 0.02 per unit of risk. If you would invest 2,239 in FAST RETAIL ADR on October 16, 2024 and sell it today you would earn a total of 701.00 from holding FAST RETAIL ADR or generate 31.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
FAST RETAIL ADR vs. DONGJIANG ENVIRONMENTAL H
Performance |
| Timeline |
| FAST RETAIL ADR |
| DONGJIANG ENVIRONMENTAL |
FAST RETAIL and DONGJIANG ENVIRONMENTAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and DONGJIANG ENVIRONMENTAL
The main advantage of trading using opposite FAST RETAIL and DONGJIANG ENVIRONMENTAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL will offset losses from the drop in DONGJIANG ENVIRONMENTAL's long position.| FAST RETAIL vs. MUTUIONLINE | FAST RETAIL vs. Tencent Music Entertainment | FAST RETAIL vs. SCANSOURCE | FAST RETAIL vs. CODERE ONLINE LUX |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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