Correlation Between Fast Retailing and ABC MartInc

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

Diversification Opportunities for Fast Retailing and ABC MartInc

0.0

Correlation Coefficient

Fast Retailing  ABC MartInc

Pay attention - limited upside

The 3 months correlation between Fast and ABC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and ABC MartInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC MartInc 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 ABC MartInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC MartInc has no effect on the direction of Fast Retailing i.e., Fast Retailing and ABC MartInc go up and down completely randomly.

Pair Corralation between Fast Retailing and ABC MartInc

If you would invest  5,943  in ABC MartInc on October 13, 2024 and sell it today you would earn a total of  0.00  from holding ABC MartInc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Fast Retailing Co  vs.  ABC MartInc

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. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ABC MartInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABC MartInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ABC MartInc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fast Retailing and ABC MartInc

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

The idea behind Fast Retailing Co and ABC MartInc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..