Correlation Between Fast Retailing and Anonymous Intelligence

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

Diversification Opportunities for Fast Retailing and Anonymous Intelligence

0.03

Correlation Coefficient

Fast Retailing  Anonymous Intelligence

Significant diversification

The 3 months correlation between Fast and Anonymous is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Anonymous Intelligence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anonymous Intelligence 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 Anonymous Intelligence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anonymous Intelligence has no effect on the direction of Fast Retailing i.e., Fast Retailing and Anonymous Intelligence go up and down completely randomly.

Pair Corralation between Fast Retailing and Anonymous Intelligence

Assuming the 90 days horizon Fast Retailing is expected to generate 28.93 times less return on investment than Anonymous Intelligence. But when comparing it to its historical volatility, Fast Retailing Co is 24.22 times less risky than Anonymous Intelligence. It trades about 0.07 of its potential returns per unit of risk. Anonymous Intelligence is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.39  in Anonymous Intelligence on September 15, 2024 and sell it today you would earn a total of  7.96  from holding Anonymous Intelligence or generate 572.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.16%
Values	Daily Returns

Fast Retailing Co  vs.  Anonymous Intelligence

Fast Retailing

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fast Retailing Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fast Retailing is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Anonymous Intelligence

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anonymous Intelligence are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Anonymous Intelligence reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fast Retailing and Anonymous Intelligence

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

The idea behind Fast Retailing Co and Anonymous Intelligence 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.