Correlation Between Fast Retailing and 55300RAB7

Can any of the company-specific risk be diversified away by investing in both Fast Retailing and 55300RAB7 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 Fast Retailing and 55300RAB7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fast Retailing Co and MGM China Holdings, you can compare the effects of market volatilities on Fast Retailing and 55300RAB7 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 Fast Retailing with a short position of 55300RAB7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and 55300RAB7.

Diversification Opportunities for Fast Retailing and 55300RAB7

0.04

Correlation Coefficient

Fast Retailing  55300RAB7

Significant diversification

The 3 months correlation between Fast and 55300RAB7 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and MGM China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGM China Holdings and Fast Retailing 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 Fast Retailing Co are associated (or correlated) with 55300RAB7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGM China Holdings has no effect on the direction of Fast Retailing i.e., Fast Retailing and 55300RAB7 go up and down completely randomly.

Pair Corralation between Fast Retailing and 55300RAB7

Assuming the 90 days horizon Fast Retailing Co is expected to generate 13.15 times more return on investment than 55300RAB7. However, Fast Retailing is 13.15 times more volatile than MGM China Holdings. It trades about 0.03 of its potential returns per unit of risk. MGM China Holdings is currently generating about -0.05 per unit of risk. If you would invest  32,455  in Fast Retailing Co on September 13, 2024 and sell it today you would earn a total of  1,135  from holding Fast Retailing Co or generate 3.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	53.97%
Values	Daily Returns

Fast Retailing Co  vs.  MGM China Holdings

Fast Retailing

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fast Retailing Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fast Retailing is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MGM China Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGM China Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 55300RAB7 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fast Retailing and 55300RAB7

The main advantage of trading using opposite Fast Retailing and 55300RAB7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, 55300RAB7 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 55300RAB7 will offset losses from the drop in 55300RAB7's long position.

The idea behind Fast Retailing Co and MGM China Holdings 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.