Correlation Between Datang International and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both Datang International 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 Datang International and FAST RETAIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datang International Power and FAST RETAIL ADR, you can compare the effects of market volatilities on Datang International 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 Datang International with a short position of FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang International and FAST RETAIL.
Diversification Opportunities for Datang International and FAST RETAIL
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Datang and FAST is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Datang International Power 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 Datang International 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 Datang International Power 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 Datang International i.e., Datang International and FAST RETAIL go up and down completely randomly.
Pair Corralation between Datang International and FAST RETAIL
Assuming the 90 days horizon Datang International is expected to generate 1.51 times less return on investment than FAST RETAIL. In addition to that, Datang International is 1.76 times more volatile than FAST RETAIL ADR. It trades about 0.1 of its total potential returns per unit of risk. FAST RETAIL ADR is currently generating about 0.27 per unit of volatility. If you would invest 2,960 in FAST RETAIL ADR on September 20, 2024 and sell it today you would earn a total of 300.00 from holding FAST RETAIL ADR or generate 10.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Datang International Power vs. FAST RETAIL ADR
Performance |
Timeline |
Datang International |
FAST RETAIL ADR |
Datang International and FAST RETAIL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Datang International and FAST RETAIL
The main advantage of trading using opposite Datang International and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang International 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.Datang International vs. THORNEY TECHS LTD | Datang International vs. AAC TECHNOLOGHLDGADR | Datang International vs. SIMS METAL MGT | Datang International vs. Playtech plc |
FAST RETAIL vs. JJ SNACK FOODS | FAST RETAIL vs. DATANG INTL POW | FAST RETAIL vs. Data3 Limited | FAST RETAIL vs. Datang International Power |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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