Correlation Between FAST RETAIL and Vastned Retail

Can any of the company-specific risk be diversified away by investing in both FAST RETAIL and Vastned 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 FAST RETAIL and Vastned Retail 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 Vastned Retail NV, you can compare the effects of market volatilities on FAST RETAIL and Vastned 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 FAST RETAIL with a short position of Vastned Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAST RETAIL and Vastned Retail.

Diversification Opportunities for FAST RETAIL and Vastned Retail

0.55

Correlation Coefficient

FAST RETAIL  Vastned Retail

Very weak diversification

The 3 months correlation between FAST and Vastned is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding FAST RETAIL ADR and Vastned Retail NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail NV 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 Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail NV has no effect on the direction of FAST RETAIL i.e., FAST RETAIL and Vastned Retail go up and down completely randomly.

Pair Corralation between FAST RETAIL and Vastned Retail

Assuming the 90 days trading horizon FAST RETAIL ADR is expected to generate 2.8 times more return on investment than Vastned Retail. However, FAST RETAIL is 2.8 times more volatile than Vastned Retail NV. It trades about 0.09 of its potential returns per unit of risk. Vastned Retail NV is currently generating about 0.08 per unit of risk. If you would invest  2,860  in FAST RETAIL ADR on September 3, 2024 and sell it today you would earn a total of  300.00  from holding FAST RETAIL ADR or generate 10.49% return on investment over 90 days.

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

FAST RETAIL ADR  vs.  Vastned Retail NV

FAST RETAIL ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FAST RETAIL ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, FAST RETAIL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vastned Retail NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vastned Retail NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FAST RETAIL and Vastned Retail

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

The idea behind FAST RETAIL ADR and Vastned Retail NV 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.