Correlation Between Transocean and Fast Retailing

Can any of the company-specific risk be diversified away by investing in both Transocean and Fast Retailing 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 Transocean and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Transocean and Fast Retailing Co, you can compare the effects of market volatilities on Transocean and Fast Retailing 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 Transocean with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transocean and Fast Retailing.

Diversification Opportunities for Transocean and Fast Retailing

0.0

Correlation Coefficient

Transocean  Fast Retailing

Pay attention - limited upside

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

Pair Corralation between Transocean and Fast Retailing

Considering the 90-day investment horizon Transocean is expected to under-perform the Fast Retailing. In addition to that, Transocean is 1.21 times more volatile than Fast Retailing Co. It trades about -0.25 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about -0.07 per unit of volatility. If you would invest  33,260  in Fast Retailing Co on December 2, 2024 and sell it today you would lose (2,273) from holding Fast Retailing Co or give up 6.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Transocean  vs.  Fast Retailing Co

Transocean

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transocean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Fast Retailing

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Transocean and Fast Retailing

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

The idea behind Transocean and Fast Retailing Co 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.