Correlation Between NISSAN CHEMICAL and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both NISSAN CHEMICAL and FAST RETAIL 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 NISSAN CHEMICAL and FAST RETAIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NISSAN CHEMICAL IND and FAST RETAIL ADR, you can compare the effects of market volatilities on NISSAN CHEMICAL and FAST RETAIL 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 NISSAN CHEMICAL with a short position of FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSAN CHEMICAL and FAST RETAIL.
Diversification Opportunities for NISSAN CHEMICAL and FAST RETAIL
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NISSAN and FAST is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR and NISSAN CHEMICAL 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 NISSAN CHEMICAL IND are associated (or correlated) with FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and FAST RETAIL go up and down completely randomly.
Pair Corralation between NISSAN CHEMICAL and FAST RETAIL
Assuming the 90 days trading horizon NISSAN CHEMICAL IND is expected to under-perform the FAST RETAIL. But the stock apears to be less risky and, when comparing its historical volatility, NISSAN CHEMICAL IND is 1.35 times less risky than FAST RETAIL. The stock trades about -0.12 of its potential returns per unit of risk. The FAST RETAIL ADR is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 2,920 in FAST RETAIL ADR on September 14, 2024 and sell it today you would earn a total of 400.00 from holding FAST RETAIL ADR or generate 13.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NISSAN CHEMICAL IND vs. FAST RETAIL ADR
Performance |
| Timeline |
| NISSAN CHEMICAL IND |
| FAST RETAIL ADR |
NISSAN CHEMICAL and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NISSAN CHEMICAL and FAST RETAIL
The main advantage of trading using opposite NISSAN CHEMICAL and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSAN CHEMICAL position performs unexpectedly, FAST RETAIL 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 RETAIL will offset losses from the drop in FAST RETAIL's long position.| NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc |
| FAST RETAIL vs. CCC SA | FAST RETAIL vs. AOYAMA TRADING | FAST RETAIL vs. Superior Plus Corp | FAST RETAIL vs. SIVERS SEMICONDUCTORS AB |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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