Correlation Between Fast Retailing and Obayashi
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Obayashi 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 Retailing and Obayashi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and Obayashi, you can compare the effects of market volatilities on Fast Retailing and Obayashi 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 Retailing with a short position of Obayashi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Obayashi.
Diversification Opportunities for Fast Retailing and Obayashi
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fast and Obayashi is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Obayashi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obayashi and Fast Retailing 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 Retailing Co are associated (or correlated) with Obayashi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obayashi has no effect on the direction of Fast Retailing i.e., Fast Retailing and Obayashi go up and down completely randomly.
Pair Corralation between Fast Retailing and Obayashi
Assuming the 90 days horizon Fast Retailing Co is expected to generate 0.9 times more return on investment than Obayashi. However, Fast Retailing Co is 1.11 times less risky than Obayashi. It trades about 0.17 of its potential returns per unit of risk. Obayashi is currently generating about -0.21 per unit of risk. If you would invest 32,065 in Fast Retailing Co on September 28, 2024 and sell it today you would earn a total of 1,195 from holding Fast Retailing Co or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Fast Retailing Co vs. Obayashi
Performance |
| Timeline |
| Fast Retailing |
| Obayashi |
Fast Retailing and Obayashi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Obayashi
The main advantage of trading using opposite Fast Retailing and Obayashi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Obayashi 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 Obayashi will offset losses from the drop in Obayashi's long position.| Fast Retailing vs. Aritzia | Fast Retailing vs. Boot Barn Holdings | Fast Retailing vs. Guess Inc | Fast Retailing vs. The TJX Companies |
| Obayashi vs. Watsco Inc | Obayashi vs. Fastenal Company | Obayashi vs. SiteOne Landscape Supply | Obayashi vs. Ferguson Plc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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