Correlation Between Fast Retailing and ATOSS SOFTWARE

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

Diversification Opportunities for Fast Retailing and ATOSS SOFTWARE

0.21

Correlation Coefficient

Fast Retailing  ATOSS SOFTWARE

Modest diversification

The 3 months correlation between Fast and ATOSS is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and ATOSS SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATOSS SOFTWARE 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 ATOSS SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATOSS SOFTWARE has no effect on the direction of Fast Retailing i.e., Fast Retailing and ATOSS SOFTWARE go up and down completely randomly.

Pair Corralation between Fast Retailing and ATOSS SOFTWARE

Assuming the 90 days trading horizon Fast Retailing is expected to generate 1.1 times less return on investment than ATOSS SOFTWARE. But when comparing it to its historical volatility, Fast Retailing Co is 1.21 times less risky than ATOSS SOFTWARE. It trades about 0.07 of its potential returns per unit of risk. ATOSS SOFTWARE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,819  in ATOSS SOFTWARE on September 16, 2024 and sell it today you would earn a total of  4,981  from holding ATOSS SOFTWARE or generate 73.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Fast Retailing Co  vs.  ATOSS SOFTWARE

Fast Retailing

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fast Retailing Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Fast Retailing exhibited solid returns over the last few months and may actually be approaching a breakup point.

ATOSS SOFTWARE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATOSS SOFTWARE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ATOSS SOFTWARE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fast Retailing and ATOSS SOFTWARE

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

The idea behind Fast Retailing Co and ATOSS SOFTWARE 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.