Correlation Between PPG Industries and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both PPG Industries 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 PPG Industries and FAST RETAIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and FAST RETAIL ADR, you can compare the effects of market volatilities on PPG Industries 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 PPG Industries with a short position of FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and FAST RETAIL.
Diversification Opportunities for PPG Industries and FAST RETAIL
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPG and FAST is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries 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 PPG Industries 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 PPG Industries 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 PPG Industries i.e., PPG Industries and FAST RETAIL go up and down completely randomly.
Pair Corralation between PPG Industries and FAST RETAIL
Assuming the 90 days horizon PPG Industries is expected to generate 18.94 times less return on investment than FAST RETAIL. But when comparing it to its historical volatility, PPG Industries is 1.43 times less risky than FAST RETAIL. It trades about 0.0 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,863 in FAST RETAIL ADR on August 30, 2024 and sell it today you would earn a total of 1,217 from holding FAST RETAIL ADR or generate 65.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPG Industries vs. FAST RETAIL ADR
Performance |
| Timeline |
| PPG Industries |
| FAST RETAIL ADR |
PPG Industries and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and FAST RETAIL
The main advantage of trading using opposite PPG Industries and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries 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.| PPG Industries vs. Daito Trust Construction | PPG Industries vs. HYDROFARM HLD GRP | PPG Industries vs. AGRICULTBK HADR25 YC | PPG Industries vs. Ross Stores |
| FAST RETAIL vs. SIDETRADE EO 1 | FAST RETAIL vs. RETAIL FOOD GROUP | FAST RETAIL vs. China Resources Beer | FAST RETAIL vs. CARSALESCOM |
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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