Correlation Between Fast Retailing and SEEK

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

Diversification Opportunities for Fast Retailing and SEEK

-0.35

Correlation Coefficient

Fast Retailing  SEEK

Very good diversification

The 3 months correlation between Fast and SEEK is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and SEEK Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEEK Limited 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 SEEK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEEK Limited has no effect on the direction of Fast Retailing i.e., Fast Retailing and SEEK go up and down completely randomly.

Pair Corralation between Fast Retailing and SEEK

Assuming the 90 days trading horizon Fast Retailing Co is expected to under-perform the SEEK. In addition to that, Fast Retailing is 1.3 times more volatile than SEEK Limited. It trades about -0.07 of its total potential returns per unit of risk. SEEK Limited is currently generating about 0.1 per unit of volatility. If you would invest  1,230  in SEEK Limited on May 11, 2025 and sell it today you would earn a total of  120.00  from holding SEEK Limited or generate 9.76% return on investment over 90 days.

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

Fast Retailing Co  vs.  SEEK Limited

Fast Retailing

Risk-Adjusted Performance

Weakest

Over the last 90 days Fast Retailing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

SEEK Limited

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in SEEK Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SEEK may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Fast Retailing and SEEK

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

The idea behind Fast Retailing Co and SEEK Limited 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.