Correlation Between FAST RETAIL and CVW CLEANTECH
Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and CVW CLEANTECH 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 CVW CLEANTECH 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 CVW CLEANTECH INC, you can compare the effects of market volatilities on FAST RETAIL and CVW CLEANTECH 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 CVW CLEANTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and CVW CLEANTECH.
Diversification Opportunities for FAST RETAIL and CVW CLEANTECH
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FAST and CVW is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and CVW CLEANTECH INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CLEANTECH INC 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 CVW CLEANTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CLEANTECH INC has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and CVW CLEANTECH go up and down completely randomly.
Pair Corralation between FAST RETAIL and CVW CLEANTECH
Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 0.42 times more return on investment than CVW CLEANTECH. However, FAST RETAIL ADR is 2.37 times less risky than CVW CLEANTECH. It trades about 0.06 of its potential returns per unit of risk. CVW CLEANTECH INC is currently generating about 0.01 per unit of risk. If you would invest 1,765 in FAST RETAIL ADR on October 18, 2024 and sell it today you would earn a total of 1,235 from holding FAST RETAIL ADR or generate 69.97% 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. CVW CLEANTECH INC
Performance |
Timeline |
FAST RETAIL ADR |
CVW CLEANTECH INC |
FAST RETAIL and CVW CLEANTECH Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FAST RETAIL and CVW CLEANTECH
The main advantage of trading using opposite FAST RETAIL and CVW CLEANTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, CVW CLEANTECH 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 CVW CLEANTECH will offset losses from the drop in CVW CLEANTECH's long position.FAST RETAIL vs. EEDUCATION ALBERT AB | FAST RETAIL vs. betterU Education Corp | FAST RETAIL vs. G8 EDUCATION | FAST RETAIL vs. American Public Education |
CVW CLEANTECH vs. AEON STORES | CVW CLEANTECH vs. The Japan Steel | CVW CLEANTECH vs. FAST RETAIL ADR | CVW CLEANTECH vs. COSTCO WHOLESALE CDR |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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