Correlation Between H2O Retailing and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both H2O Retailing and Fast Retailing 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 H2O Retailing and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and Fast Retailing Co, you can compare the effects of market volatilities on H2O Retailing and Fast Retailing 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 H2O Retailing with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and Fast Retailing.
Diversification Opportunities for H2O Retailing and Fast Retailing
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between H2O and Fast is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and H2O 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 H2O Retailing are associated (or correlated) with Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of H2O Retailing i.e., H2O Retailing and Fast Retailing go up and down completely randomly.
Pair Corralation between H2O Retailing and Fast Retailing
Assuming the 90 days horizon H2O Retailing is expected to generate 0.67 times more return on investment than Fast Retailing. However, H2O Retailing is 1.48 times less risky than Fast Retailing. It trades about 0.08 of its potential returns per unit of risk. Fast Retailing Co is currently generating about -0.15 per unit of risk. If you would invest 1,400 in H2O Retailing on November 2, 2024 and sell it today you would earn a total of 30.00 from holding H2O Retailing or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
H2O Retailing vs. Fast Retailing Co
Performance |
| Timeline |
| H2O Retailing |
| Fast Retailing |
H2O Retailing and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and Fast Retailing
The main advantage of trading using opposite H2O Retailing and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| H2O Retailing vs. DISTRICT METALS | H2O Retailing vs. GREENX METALS LTD | H2O Retailing vs. Nucletron Electronic Aktiengesellschaft | H2O Retailing vs. Kaiser Aluminum |
| Fast Retailing vs. Singapore Airlines Limited | Fast Retailing vs. GMO Internet | Fast Retailing vs. Fortescue Metals Group | Fast Retailing vs. Spirent Communications 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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