Correlation Between Fast Retailing and ASURE SOFTWARE

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

Diversification Opportunities for Fast Retailing and ASURE SOFTWARE

-0.15

Correlation Coefficient

Fast Retailing  ASURE SOFTWARE

Good diversification

The 3 months correlation between Fast and ASURE is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and ASURE SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASURE SOFTWARE 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 ASURE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASURE SOFTWARE has no effect on the direction of Fast Retailing i.e., Fast Retailing and ASURE SOFTWARE go up and down completely randomly.

Pair Corralation between Fast Retailing and ASURE SOFTWARE

Assuming the 90 days trading horizon Fast Retailing Co is expected to under-perform the ASURE SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, Fast Retailing Co is 2.01 times less risky than ASURE SOFTWARE. The stock trades about -0.14 of its potential returns per unit of risk. The ASURE SOFTWARE is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  870.00  in ASURE SOFTWARE on December 20, 2024 and sell it today you would earn a total of  65.00  from holding ASURE SOFTWARE or generate 7.47% return on investment over 90 days.

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

Fast Retailing Co  vs.  ASURE SOFTWARE

Fast Retailing

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ASURE SOFTWARE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASURE SOFTWARE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, ASURE SOFTWARE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fast Retailing and ASURE SOFTWARE

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

The idea behind Fast Retailing Co and ASURE SOFTWARE 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.