Correlation Between FAST RETAIL and CCC SA

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

By analyzing existing cross correlation between FAST RETAIL ADR and CCC SA, you can compare the effects of market volatilities on FAST RETAIL and CCC SA 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 RETAIL with a short position of CCC SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and CCC SA.

Diversification Opportunities for FAST RETAIL and CCC SA

0.67

Correlation Coefficient

FAST RETAIL  CCC SA

Poor diversification

The 3 months correlation between FAST and CCC is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and CCC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCC SA and FAST RETAIL 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 RETAIL ADR are associated (or correlated) with CCC SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCC SA has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and CCC SA go up and down completely randomly.

Pair Corralation between FAST RETAIL and CCC SA

Assuming the 90 days trading horizon FAST RETAIL is expected to generate 1.42 times less return on investment than CCC SA. But when comparing it to its historical volatility, FAST RETAIL ADR is 1.6 times less risky than CCC SA. It trades about 0.16 of its potential returns per unit of risk. CCC SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,430  in CCC SA on September 13, 2024 and sell it today you would earn a total of  984.00  from holding CCC SA or generate 28.69% return on investment over 90 days.

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

FAST RETAIL ADR  vs.  CCC SA

FAST RETAIL ADR

Risk-Adjusted Performance

12 of 100

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.

CCC SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CCC SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CCC SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FAST RETAIL and CCC SA

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

The idea behind FAST RETAIL ADR and CCC SA 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.