Correlation Between FAST RETAIL and POSBO UNSPADRS/20YC1

Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and POSBO UNSPADRS/20YC1 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 RETAIL and POSBO UNSPADRS/20YC1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FAST RETAIL ADR and POSBO UNSPADRS20YC1, you can compare the effects of market volatilities on FAST RETAIL and POSBO UNSPADRS/20YC1 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 RETAIL with a short position of POSBO UNSPADRS/20YC1. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and POSBO UNSPADRS/20YC1.

Diversification Opportunities for FAST RETAIL and POSBO UNSPADRS/20YC1

-0.02

Correlation Coefficient

FAST RETAIL  POSBO UNSPADRS/20YC1

Good diversification

The 3 months correlation between FAST and POSBO is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and POSBO UNSPADRS20YC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSBO UNSPADRS/20YC1 and FAST RETAIL 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 RETAIL ADR are associated (or correlated) with POSBO UNSPADRS/20YC1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSBO UNSPADRS/20YC1 has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and POSBO UNSPADRS/20YC1 go up and down completely randomly.

Pair Corralation between FAST RETAIL and POSBO UNSPADRS/20YC1

Assuming the 90 days trading horizon FAST RETAIL ADR is expected to under-perform the POSBO UNSPADRS/20YC1. In addition to that, FAST RETAIL is 1.09 times more volatile than POSBO UNSPADRS20YC1. It trades about -0.04 of its total potential returns per unit of risk. POSBO UNSPADRS20YC1 is currently generating about 0.2 per unit of volatility. If you would invest  999.00  in POSBO UNSPADRS20YC1 on October 10, 2024 and sell it today you would earn a total of  71.00  from holding POSBO UNSPADRS20YC1 or generate 7.11% return on investment over 90 days.

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

FAST RETAIL ADR  vs.  POSBO UNSPADRS20YC1

FAST RETAIL ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FAST RETAIL ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FAST RETAIL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

POSBO UNSPADRS/20YC1

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in POSBO UNSPADRS20YC1 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, POSBO UNSPADRS/20YC1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FAST RETAIL and POSBO UNSPADRS/20YC1

The main advantage of trading using opposite FAST RETAIL and POSBO UNSPADRS/20YC1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAST RETAIL position performs unexpectedly, POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1 will offset losses from the drop in POSBO UNSPADRS/20YC1's long position.

The idea behind FAST RETAIL ADR and POSBO UNSPADRS20YC1 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.