Correlation Between CCC SA and FAST RETAIL

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

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

Diversification Opportunities for CCC SA and FAST RETAIL

0.03

Correlation Coefficient

CCC SA  FAST RETAIL

Significant diversification

The 3 months correlation between CCC and FAST is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding CCC SA 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 CCC SA 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 CCC SA 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 CCC SA i.e., CCC SA and FAST RETAIL go up and down completely randomly.

Pair Corralation between CCC SA and FAST RETAIL

Assuming the 90 days horizon CCC SA is expected to generate 1.58 times more return on investment than FAST RETAIL. However, CCC SA is 1.58 times more volatile than FAST RETAIL ADR. It trades about -0.02 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about -0.07 per unit of risk. If you would invest  4,784  in CCC SA on December 2, 2024 and sell it today you would lose (290.00) from holding CCC SA or give up 6.06% of portfolio value over 90 days.

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

CCC SA  vs.  FAST RETAIL ADR

CCC SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days CCC SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CCC SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

FAST RETAIL ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days FAST RETAIL ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CCC SA and FAST RETAIL

The main advantage of trading using opposite CCC SA and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCC SA 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.

The idea behind CCC SA and FAST RETAIL ADR 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..