Correlation Between FAST RETAIL and Hyster-Yale Materials
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and Hyster-Yale Materials 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 Hyster-Yale Materials 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 Hyster Yale Materials Handling, you can compare the effects of market volatilities on FAST RETAIL and Hyster-Yale Materials 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 Hyster-Yale Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and Hyster-Yale Materials.
Diversification Opportunities for FAST RETAIL and Hyster-Yale Materials
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FAST and Hyster-Yale is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Hyster Yale Materials Handling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyster Yale Materials 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 Hyster-Yale Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyster Yale Materials has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Hyster-Yale Materials go up and down completely randomly.
Pair Corralation between FAST RETAIL and Hyster-Yale Materials
Assuming the 90 days trading horizon FAST RETAIL is expected to generate 1.05 times less return on investment than Hyster-Yale Materials. But when comparing it to its historical volatility, FAST RETAIL ADR is 1.47 times less risky than Hyster-Yale Materials. It trades about 0.06 of its potential returns per unit of risk. Hyster Yale Materials Handling is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,208 in Hyster Yale Materials Handling on August 26, 2024 and sell it today you would earn a total of 992.00 from holding Hyster Yale Materials Handling or generate 23.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. Hyster Yale Materials Handling
Performance |
| Timeline |
| FAST RETAIL ADR |
| Hyster Yale Materials |
FAST RETAIL and Hyster-Yale Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and Hyster-Yale Materials
The main advantage of trading using opposite FAST RETAIL and Hyster-Yale Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, Hyster-Yale Materials 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 Hyster-Yale Materials will offset losses from the drop in Hyster-Yale Materials' long position.| FAST RETAIL vs. CHEMICAL INDUSTRIES | FAST RETAIL vs. TIANDE CHEMICAL | FAST RETAIL vs. Data3 Limited | FAST RETAIL vs. Soken Chemical Engineering |
| Hyster-Yale Materials vs. KION Group AG | Hyster-Yale Materials vs. Sinotruk Limited | Hyster-Yale Materials vs. Superior Plus Corp | Hyster-Yale Materials vs. NMI Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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