Correlation Between FAST RETAIL and NEL ASA

Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and NEL ASA 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 NEL ASA 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 NEL ASA ADR30, you can compare the effects of market volatilities on FAST RETAIL and NEL ASA 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 NEL ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and NEL ASA.

Diversification Opportunities for FAST RETAIL and NEL ASA

-0.62

Correlation Coefficient

FAST RETAIL  NEL ASA

Excellent diversification

The 3 months correlation between FAST and NEL is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and NEL ASA ADR30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEL ASA ADR30 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 NEL ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEL ASA ADR30 has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and NEL ASA go up and down completely randomly.

Pair Corralation between FAST RETAIL and NEL ASA

Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 0.24 times more return on investment than NEL ASA. However, FAST RETAIL ADR is 4.13 times less risky than NEL ASA. It trades about 0.15 of its potential returns per unit of risk. NEL ASA ADR30 is currently generating about -0.15 per unit of risk. If you would invest  2,980  in FAST RETAIL ADR on September 1, 2024 and sell it today you would earn a total of  180.00  from holding FAST RETAIL ADR or generate 6.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

FAST RETAIL ADR  vs.  NEL ASA ADR30

FAST RETAIL ADR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FAST RETAIL ADR are ranked lower than 7 (%) 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 December 2024.

NEL ASA ADR30

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEL ASA ADR30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FAST RETAIL and NEL ASA

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

The idea behind FAST RETAIL ADR and NEL ASA ADR30 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.