Correlation Between FAST RETAIL and NISSAN CHEMICAL
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and NISSAN CHEMICAL 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 NISSAN CHEMICAL 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 NISSAN CHEMICAL IND, you can compare the effects of market volatilities on FAST RETAIL and NISSAN CHEMICAL 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 NISSAN CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and NISSAN CHEMICAL.
Diversification Opportunities for FAST RETAIL and NISSAN CHEMICAL
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FAST and NISSAN is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and NISSAN CHEMICAL IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSAN CHEMICAL IND 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 NISSAN CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSAN CHEMICAL IND has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and NISSAN CHEMICAL go up and down completely randomly.
Pair Corralation between FAST RETAIL and NISSAN CHEMICAL
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 1.35 times more return on investment than NISSAN CHEMICAL. However, FAST RETAIL is 1.35 times more volatile than NISSAN CHEMICAL IND. It trades about 0.4 of its potential returns per unit of risk. NISSAN CHEMICAL IND is currently generating about -0.12 per unit of risk. If you would invest 2,920 in FAST RETAIL ADR on September 14, 2024 and sell it today you would earn a total of 400.00 from holding FAST RETAIL ADR or generate 13.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. NISSAN CHEMICAL IND
Performance |
| Timeline |
| FAST RETAIL ADR |
| NISSAN CHEMICAL IND |
FAST RETAIL and NISSAN CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and NISSAN CHEMICAL
The main advantage of trading using opposite FAST RETAIL and NISSAN CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, NISSAN CHEMICAL 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 NISSAN CHEMICAL will offset losses from the drop in NISSAN CHEMICAL's long position.| FAST RETAIL vs. CCC SA | FAST RETAIL vs. AOYAMA TRADING | FAST RETAIL vs. Superior Plus Corp | FAST RETAIL vs. SIVERS SEMICONDUCTORS AB |
| NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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