Correlation Between Fast Retailing and CROWN

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

Diversification Opportunities for Fast Retailing and CROWN

0.62

Correlation Coefficient

Fast Retailing  CROWN

Poor diversification

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

Pair Corralation between Fast Retailing and CROWN

Assuming the 90 days horizon Fast Retailing Co is expected to under-perform the CROWN. In addition to that, Fast Retailing is 2.52 times more volatile than CROWN CASTLE INTERNATIONAL. It trades about -0.2 of its total potential returns per unit of risk. CROWN CASTLE INTERNATIONAL is currently generating about -0.17 per unit of volatility. If you would invest  8,280  in CROWN CASTLE INTERNATIONAL on October 22, 2024 and sell it today you would lose (143.00) from holding CROWN CASTLE INTERNATIONAL or give up 1.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Fast Retailing Co  vs.  CROWN CASTLE INTERNATIONAL

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 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.

CROWN CASTLE INTERNA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CROWN CASTLE INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fast Retailing and CROWN

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

The idea behind Fast Retailing Co and CROWN CASTLE INTERNATIONAL 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.