Correlation Between FAST RETAIL and Autodesk

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

Diversification Opportunities for FAST RETAIL and Autodesk

0.06

Correlation Coefficient

FAST RETAIL  Autodesk

Significant diversification

The 3 months correlation between FAST and Autodesk is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Autodesk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autodesk 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 Autodesk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autodesk has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Autodesk go up and down completely randomly.

Pair Corralation between FAST RETAIL and Autodesk

Assuming the 90 days trading horizon FAST RETAIL ADR is expected to under-perform the Autodesk. In addition to that, FAST RETAIL is 1.01 times more volatile than Autodesk. It trades about -0.01 of its total potential returns per unit of risk. Autodesk is currently generating about 0.09 per unit of volatility. If you would invest  26,575  in Autodesk on October 26, 2024 and sell it today you would earn a total of  2,400  from holding Autodesk or generate 9.03% return on investment over 90 days.

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

FAST RETAIL ADR  vs.  Autodesk

FAST RETAIL ADR

Risk-Adjusted Performance

0 of 100

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Autodesk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Autodesk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Autodesk may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FAST RETAIL and Autodesk

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

The idea behind FAST RETAIL ADR and Autodesk 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.