Correlation Between Sea and Fast Retailing

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Sea 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 Sea and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and Fast Retailing Co, you can compare the effects of market volatilities on Sea 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 Sea with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Fast Retailing.

Diversification Opportunities for Sea and Fast Retailing

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between Sea and Fast is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Sea 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 Sea 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 Sea i.e., Sea and Fast Retailing go up and down completely randomly.

Pair Corralation between Sea and Fast Retailing

Allowing for the 90-day total investment horizon Sea is expected to generate 0.88 times more return on investment than Fast Retailing. However, Sea is 1.14 times less risky than Fast Retailing. It trades about 0.26 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.07 per unit of risk. If you would invest  8,033  in Sea on September 17, 2024 and sell it today you would earn a total of  3,614  from holding Sea or generate 44.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Sea  vs.  Fast Retailing Co

 Performance 
       Timeline  
Sea 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.
Fast Retailing 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
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 fragile basic indicators, Fast Retailing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sea and Fast Retailing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sea and Fast Retailing

The main advantage of trading using opposite Sea and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea 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 Sea 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.
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 Transaction History module to view history of all your transactions and understand their impact on performance.

Other Complementary Tools

Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Insider Screener
Find insiders across different sectors to evaluate their impact on performance