Correlation Between Fast Retailing and Kering SA

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

Diversification Opportunities for Fast Retailing and Kering SA

-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between Fast and Kering is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Fast Retailing i.e., Fast Retailing and Kering SA go up and down completely randomly.

Pair Corralation between Fast Retailing and Kering SA

Assuming the 90 days horizon Fast Retailing Co is expected to under-perform the Kering SA. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fast Retailing Co is 1.44 times less risky than Kering SA. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Kering SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,995  in Kering SA on May 3, 2025 and sell it today you would earn a total of  480.00  from holding Kering SA or generate 24.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Fast Retailing Co  vs.  Kering SA

 Performance 
       Timeline  
Fast Retailing 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Fast Retailing Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fast Retailing is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Kering SA 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Kering SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kering SA showed solid returns over the last few months and may actually be approaching a breakup point.

Fast Retailing and Kering SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fast Retailing and Kering SA

The main advantage of trading using opposite Fast Retailing and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing position performs unexpectedly, Kering 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 Kering SA will offset losses from the drop in Kering SA's long position.
The idea behind Fast Retailing Co and Kering 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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