Correlation Between Trio Tech and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Trio Tech 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 Trio Tech and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trio Tech International and Fast Retailing Co, you can compare the effects of market volatilities on Trio Tech 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 Trio Tech with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trio Tech and Fast Retailing.
Diversification Opportunities for Trio Tech and Fast Retailing
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Trio and Fast is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Trio Tech International and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Trio Tech 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 Trio Tech International 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 Trio Tech i.e., Trio Tech and Fast Retailing go up and down completely randomly.
Pair Corralation between Trio Tech and Fast Retailing
Considering the 90-day investment horizon Trio Tech International is expected to under-perform the Fast Retailing. In addition to that, Trio Tech is 1.83 times more volatile than Fast Retailing Co. It trades about -0.23 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about 0.26 per unit of volatility. If you would invest 31,335 in Fast Retailing Co on September 23, 2024 and sell it today you would earn a total of 1,925 from holding Fast Retailing Co or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trio Tech International vs. Fast Retailing Co
Performance |
| Timeline |
| Trio Tech International |
| Fast Retailing |
Trio Tech and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trio Tech and Fast Retailing
The main advantage of trading using opposite Trio Tech and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trio Tech 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.| Trio Tech vs. Aehr Test Systems | Trio Tech vs. Camtek | Trio Tech vs. Nova | Trio Tech vs. Axcelis Technologies |
| Fast Retailing vs. Aritzia | Fast Retailing vs. Boot Barn Holdings | Fast Retailing vs. Guess Inc | Fast Retailing vs. The TJX Companies |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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