Correlation Between Sims Metal and Fast Retailing

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

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

Diversification Opportunities for Sims Metal and Fast Retailing

0.67

Correlation Coefficient

Sims Metal  Fast Retailing

Poor diversification

The 3 months correlation between Sims and Fast is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing and Sims Metal 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 Sims Metal Management 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 Sims Metal i.e., Sims Metal and Fast Retailing go up and down completely randomly.

Pair Corralation between Sims Metal and Fast Retailing

Assuming the 90 days horizon Sims Metal Management is expected to generate 1.02 times more return on investment than Fast Retailing. However, Sims Metal is 1.02 times more volatile than Fast Retailing Co. It trades about 0.15 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.06 per unit of risk. If you would invest  915.00  in Sims Metal Management on September 7, 2025 and sell it today you would earn a total of  237.00  from holding Sims Metal Management or generate 25.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.94%
Values	Daily Returns

Sims Metal Management  vs.  Fast Retailing Co

Sims Metal Management

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sims Metal Management are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Sims Metal showed solid returns over the last few months and may actually be approaching a breakup point.

Fast Retailing

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Fast Retailing Co are ranked lower than 4 (%) 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 2026.

Pair Trading with Sims Metal and Fast Retailing

The main advantage of trading using opposite Sims Metal and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal 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 Sims Metal Management 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.