Correlation Between FAST RETAIL and REINET INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and REINET INVESTMENTS 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 REINET INVESTMENTS 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 REINET INVESTMENTS SCA, you can compare the effects of market volatilities on FAST RETAIL and REINET INVESTMENTS 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 REINET INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and REINET INVESTMENTS.
Diversification Opportunities for FAST RETAIL and REINET INVESTMENTS
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between FAST and REINET is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and REINET INVESTMENTS SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REINET INVESTMENTS SCA 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 REINET INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REINET INVESTMENTS SCA has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and REINET INVESTMENTS go up and down completely randomly.
Pair Corralation between FAST RETAIL and REINET INVESTMENTS
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 0.69 times more return on investment than REINET INVESTMENTS. However, FAST RETAIL ADR is 1.44 times less risky than REINET INVESTMENTS. It trades about 0.07 of its potential returns per unit of risk. REINET INVESTMENTS SCA is currently generating about 0.03 per unit of risk. If you would invest 1,716 in FAST RETAIL ADR on October 11, 2024 and sell it today you would earn a total of 1,404 from holding FAST RETAIL ADR or generate 81.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FAST RETAIL ADR vs. REINET INVESTMENTS SCA
Performance |
| Timeline |
| FAST RETAIL ADR |
| REINET INVESTMENTS SCA |
FAST RETAIL and REINET INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAST RETAIL and REINET INVESTMENTS
The main advantage of trading using opposite FAST RETAIL and REINET INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, REINET INVESTMENTS 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 REINET INVESTMENTS will offset losses from the drop in REINET INVESTMENTS's long position.| FAST RETAIL vs. BRAEMAR HOTELS RES | FAST RETAIL vs. Wyndham Hotels Resorts | FAST RETAIL vs. Xenia Hotels Resorts | FAST RETAIL vs. Nufarm Limited |
| REINET INVESTMENTS vs. Sinopec Shanghai Petrochemical | REINET INVESTMENTS vs. Elmos Semiconductor SE | REINET INVESTMENTS vs. X FAB Silicon Foundries | REINET INVESTMENTS vs. Soken Chemical Engineering |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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