Correlation Between AOYAMA TRADING and FAST RETAILCOSPHDR

Can any of the company-specific risk be diversified away by investing in both AOYAMA TRADING and FAST RETAILCOSPHDR 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 AOYAMA TRADING and FAST RETAILCOSPHDR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AOYAMA TRADING and FAST RETAILCOSPHDR 1, you can compare the effects of market volatilities on AOYAMA TRADING and FAST RETAILCOSPHDR 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 AOYAMA TRADING with a short position of FAST RETAILCOSPHDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of AOYAMA TRADING and FAST RETAILCOSPHDR.

Diversification Opportunities for AOYAMA TRADING and FAST RETAILCOSPHDR

0.32

Correlation Coefficient

AOYAMA TRADING  FAST RETAILCOSPHDR

Weak diversification

The 3 months correlation between AOYAMA and FAST is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING and FAST RETAILCOSPHDR 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAILCOSPHDR and AOYAMA TRADING 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 AOYAMA TRADING are associated (or correlated) with FAST RETAILCOSPHDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAILCOSPHDR has no effect on the direction of AOYAMA TRADING i.e., AOYAMA TRADING and FAST RETAILCOSPHDR go up and down completely randomly.

Pair Corralation between AOYAMA TRADING and FAST RETAILCOSPHDR

Assuming the 90 days horizon AOYAMA TRADING is expected to generate 1.2 times more return on investment than FAST RETAILCOSPHDR. However, AOYAMA TRADING is 1.2 times more volatile than FAST RETAILCOSPHDR 1. It trades about 0.2 of its potential returns per unit of risk. FAST RETAILCOSPHDR 1 is currently generating about 0.08 per unit of risk. If you would invest  835.00  in AOYAMA TRADING on September 12, 2024 and sell it today you would earn a total of  575.00  from holding AOYAMA TRADING or generate 68.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AOYAMA TRADING  vs.  FAST RETAILCOSPHDR 1

AOYAMA TRADING

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AOYAMA TRADING are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AOYAMA TRADING reported solid returns over the last few months and may actually be approaching a breakup point.

FAST RETAILCOSPHDR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FAST RETAILCOSPHDR 1 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FAST RETAILCOSPHDR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AOYAMA TRADING and FAST RETAILCOSPHDR

The main advantage of trading using opposite AOYAMA TRADING and FAST RETAILCOSPHDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AOYAMA TRADING position performs unexpectedly, FAST RETAILCOSPHDR 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 RETAILCOSPHDR will offset losses from the drop in FAST RETAILCOSPHDR's long position.

The idea behind AOYAMA TRADING and FAST RETAILCOSPHDR 1 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.