Correlation Between PLAYMATES TOYS and Fast Retailing

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

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

Diversification Opportunities for PLAYMATES TOYS and Fast Retailing

-0.23

Correlation Coefficient

PLAYMATES TOYS  Fast Retailing

Very good diversification

The 3 months correlation between PLAYMATES and Fast is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and PLAYMATES TOYS 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 PLAYMATES TOYS 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 PLAYMATES TOYS i.e., PLAYMATES TOYS and Fast Retailing go up and down completely randomly.

Pair Corralation between PLAYMATES TOYS and Fast Retailing

Assuming the 90 days trading horizon PLAYMATES TOYS is expected to under-perform the Fast Retailing. In addition to that, PLAYMATES TOYS is 1.73 times more volatile than Fast Retailing Co. It trades about -0.16 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about 0.04 per unit of volatility. If you would invest  33,080  in Fast Retailing Co on October 5, 2024 and sell it today you would earn a total of  340.00  from holding Fast Retailing Co or generate 1.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PLAYMATES TOYS  vs.  Fast Retailing Co

PLAYMATES TOYS

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days PLAYMATES TOYS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fast Retailing

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Fast Retailing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain basic indicators, Fast Retailing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PLAYMATES TOYS and Fast Retailing

The main advantage of trading using opposite PLAYMATES TOYS and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYMATES TOYS 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.

The idea behind PLAYMATES TOYS and Fast Retailing Co 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.