Correlation Between Fast Retailing and Top Glove
Can any of the company-specific risk be diversified away by investing in both Fast Retailing and Top Glove 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 Top Glove 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 Top Glove, you can compare the effects of market volatilities on Fast Retailing and Top Glove 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 Top Glove. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Top Glove.
Diversification Opportunities for Fast Retailing and Top Glove
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fast and Top is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Top Glove in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Glove 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 Top Glove. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Glove has no effect on the direction of Fast Retailing i.e., Fast Retailing and Top Glove go up and down completely randomly.
Pair Corralation between Fast Retailing and Top Glove
Assuming the 90 days horizon Fast Retailing Co is expected to under-perform the Top Glove. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fast Retailing Co is 4.7 times less risky than Top Glove. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Top Glove is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Top Glove on August 31, 2024 and sell it today you would earn a total of 5.00 from holding Top Glove or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. Top Glove
Performance |
| Timeline |
| Fast Retailing |
| Top Glove |
Fast Retailing and Top Glove Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and Top Glove
The main advantage of trading using opposite Fast Retailing and Top Glove positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Top Glove 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 Top Glove will offset losses from the drop in Top Glove's long position.| Fast Retailing vs. Industria de Diseno | Fast Retailing vs. Shoe Carnival | Fast Retailing vs. Genesco | Fast Retailing vs. Ross Stores |
| Top Glove vs. Sysmex Corp | Top Glove vs. Coloplast AS | Top Glove vs. Essilor International SA | Top Glove vs. Coloplast A |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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