Correlation Between CI GAMES and Fast Retailing

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

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

Diversification Opportunities for CI GAMES and Fast Retailing

-0.34

Correlation Coefficient

CI GAMES  Fast Retailing

Very good diversification

The 3 months correlation between CI7 and Fast is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CI GAMES SA and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and CI GAMES 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 CI GAMES SA 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 CI GAMES i.e., CI GAMES and Fast Retailing go up and down completely randomly.

Pair Corralation between CI GAMES and Fast Retailing

Assuming the 90 days horizon CI GAMES is expected to generate 2.01 times less return on investment than Fast Retailing. In addition to that, CI GAMES is 3.18 times more volatile than Fast Retailing Co. It trades about 0.01 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  18,833  in Fast Retailing Co on September 29, 2024 and sell it today you would earn a total of  14,147  from holding Fast Retailing Co or generate 75.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CI GAMES SA  vs.  Fast Retailing Co

CI GAMES SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fast Retailing

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fast Retailing Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fast Retailing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CI GAMES and Fast Retailing

The main advantage of trading using opposite CI GAMES and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI GAMES 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 CI GAMES SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.