Correlation Between Fast Retailing and ZOOZ Power

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

Diversification Opportunities for Fast Retailing and ZOOZ Power

0.17

Correlation Coefficient

Fast Retailing  ZOOZ Power

Average diversification

The 3 months correlation between Fast and ZOOZ is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and ZOOZ Power Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZOOZ Power 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 ZOOZ Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZOOZ Power has no effect on the direction of Fast Retailing i.e., Fast Retailing and ZOOZ Power go up and down completely randomly.

Pair Corralation between Fast Retailing and ZOOZ Power

Assuming the 90 days horizon Fast Retailing is expected to generate 19.07 times less return on investment than ZOOZ Power. But when comparing it to its historical volatility, Fast Retailing Co is 7.74 times less risky than ZOOZ Power. It trades about 0.07 of its potential returns per unit of risk. ZOOZ Power Ltd is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3.11  in ZOOZ Power Ltd on September 22, 2024 and sell it today you would earn a total of  5.77  from holding ZOOZ Power Ltd or generate 185.53% return on investment over 90 days.

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

Fast Retailing Co  vs.  ZOOZ Power Ltd

Fast Retailing

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fast Retailing Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Fast Retailing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ZOOZ Power

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ZOOZ Power Ltd are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, ZOOZ Power showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fast Retailing and ZOOZ Power

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

The idea behind Fast Retailing Co and ZOOZ Power Ltd 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.