Correlation Between Fast Retailing and PICKN PAY

Can any of the company-specific risk be diversified away by investing in both Fast Retailing and PICKN PAY 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 PICKN PAY 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 PICKN PAY STORES, you can compare the effects of market volatilities on Fast Retailing and PICKN PAY 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 PICKN PAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and PICKN PAY.

Diversification Opportunities for Fast Retailing and PICKN PAY

0.51

Correlation Coefficient

Fast Retailing  PICKN PAY

Very weak diversification

The 3 months correlation between Fast and PICKN is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and PICKN PAY STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICKN PAY STORES 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 PICKN PAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICKN PAY STORES has no effect on the direction of Fast Retailing i.e., Fast Retailing and PICKN PAY go up and down completely randomly.

Pair Corralation between Fast Retailing and PICKN PAY

Assuming the 90 days trading horizon Fast Retailing Co is expected to under-perform the PICKN PAY. In addition to that, Fast Retailing is 1.35 times more volatile than PICKN PAY STORES. It trades about -0.15 of its total potential returns per unit of risk. PICKN PAY STORES is currently generating about 0.16 per unit of volatility. If you would invest  151.00  in PICKN PAY STORES on October 20, 2024 and sell it today you would earn a total of  7.00  from holding PICKN PAY STORES or generate 4.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Fast Retailing Co  vs.  PICKN PAY STORES

Fast Retailing

Risk-Adjusted Performance

0 of 100

Very Weak

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 latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

PICKN PAY STORES

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PICKN PAY STORES are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, PICKN PAY unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fast Retailing and PICKN PAY

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

The idea behind Fast Retailing Co and PICKN PAY STORES 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.