Correlation Between INTERNET INJPADR and Fast Retailing

Can any of the company-specific risk be diversified away by investing in both INTERNET INJPADR 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 INTERNET INJPADR and Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INTERNET INJPADR 1 and Fast Retailing Co, you can compare the effects of market volatilities on INTERNET INJPADR 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 INTERNET INJPADR with a short position of Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERNET INJPADR and Fast Retailing.

Diversification Opportunities for INTERNET INJPADR and Fast Retailing

0.31

Correlation Coefficient

INTERNET INJPADR  Fast Retailing

Weak diversification

The 3 months correlation between INTERNET and Fast is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding INTERNET INJPADR 1 and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and INTERNET INJPADR 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 INTERNET INJPADR 1 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 INTERNET INJPADR i.e., INTERNET INJPADR and Fast Retailing go up and down completely randomly.

Pair Corralation between INTERNET INJPADR and Fast Retailing

Assuming the 90 days horizon INTERNET INJPADR 1 is expected to generate 2.07 times more return on investment than Fast Retailing. However, INTERNET INJPADR is 2.07 times more volatile than Fast Retailing Co. It trades about 0.04 of its potential returns per unit of risk. Fast Retailing Co is currently generating about -0.02 per unit of risk. If you would invest  3,160  in INTERNET INJPADR 1 on May 18, 2025 and sell it today you would earn a total of  140.00  from holding INTERNET INJPADR 1 or generate 4.43% return on investment over 90 days.

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

INTERNET INJPADR 1  vs.  Fast Retailing Co

INTERNET INJPADR 1

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTERNET INJPADR 1 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, INTERNET INJPADR may actually be approaching a critical reversion point that can send shares even higher in September 2025.

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 rather sound basic indicators, Fast Retailing is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with INTERNET INJPADR and Fast Retailing

The main advantage of trading using opposite INTERNET INJPADR and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERNET INJPADR 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 INTERNET INJPADR 1 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.