Correlation Between FLOW TRADERS and FAST RETAIL

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Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS and FAST RETAIL 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 FLOW TRADERS and FAST RETAIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and FAST RETAIL ADR, you can compare the effects of market volatilities on FLOW TRADERS and FAST RETAIL 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 FLOW TRADERS with a short position of FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and FAST RETAIL.

Diversification Opportunities for FLOW TRADERS and FAST RETAIL

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between FLOW and FAST is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR and FLOW TRADERS 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 FLOW TRADERS LTD are associated (or correlated) with FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of FLOW TRADERS i.e., FLOW TRADERS and FAST RETAIL go up and down completely randomly.

Pair Corralation between FLOW TRADERS and FAST RETAIL

Assuming the 90 days horizon FLOW TRADERS LTD is expected to under-perform the FAST RETAIL. But the stock apears to be less risky and, when comparing its historical volatility, FLOW TRADERS LTD is 1.3 times less risky than FAST RETAIL. The stock trades about -0.02 of its potential returns per unit of risk. The FAST RETAIL ADR is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  2,940  in FAST RETAIL ADR on September 10, 2024 and sell it today you would earn a total of  320.00  from holding FAST RETAIL ADR or generate 10.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

FLOW TRADERS LTD  vs.  FAST RETAIL ADR

 Performance 
       Timeline  
FLOW TRADERS LTD 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in FLOW TRADERS LTD are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FLOW TRADERS reported solid returns over the last few months and may actually be approaching a breakup point.
FAST RETAIL ADR 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in FAST RETAIL ADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FAST RETAIL reported solid returns over the last few months and may actually be approaching a breakup point.

FLOW TRADERS and FAST RETAIL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FLOW TRADERS and FAST RETAIL

The main advantage of trading using opposite FLOW TRADERS and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS position performs unexpectedly, FAST RETAIL 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 FAST RETAIL will offset losses from the drop in FAST RETAIL's long position.
The idea behind FLOW TRADERS LTD and FAST RETAIL ADR 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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