Correlation Between FIRST SAVINGS and FAST RETAIL

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

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

Diversification Opportunities for FIRST SAVINGS and FAST RETAIL

0.08

Correlation Coefficient

FIRST SAVINGS  FAST RETAIL

Significant diversification

The 3 months correlation between FIRST and FAST is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SAVINGS FINL 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 FIRST SAVINGS 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 FIRST SAVINGS FINL 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 FIRST SAVINGS i.e., FIRST SAVINGS and FAST RETAIL go up and down completely randomly.

Pair Corralation between FIRST SAVINGS and FAST RETAIL

Assuming the 90 days horizon FIRST SAVINGS FINL is expected to generate 1.0 times more return on investment than FAST RETAIL. However, FIRST SAVINGS FINL is 1.0 times less risky than FAST RETAIL. It trades about 0.1 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about 0.04 per unit of risk. If you would invest  1,108  in FIRST SAVINGS FINL on October 22, 2024 and sell it today you would earn a total of  1,172  from holding FIRST SAVINGS FINL or generate 105.78% return on investment over 90 days.

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

FIRST SAVINGS FINL  vs.  FAST RETAIL ADR

FIRST SAVINGS FINL

Risk-Adjusted Performance

6 of 100

Modest

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

FAST RETAIL ADR

Risk-Adjusted Performance

0 of 100

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 nearly stable basic indicators, FAST RETAIL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FIRST SAVINGS and FAST RETAIL

The main advantage of trading using opposite FIRST SAVINGS and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SAVINGS 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 FIRST SAVINGS FINL 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.