Correlation Between CCL Industries and Casio Computer

Can any of the company-specific risk be diversified away by investing in both CCL Industries and Casio Computer 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 CCL Industries and Casio Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CCL Industries and Casio Computer CoLtd, you can compare the effects of market volatilities on CCL Industries and Casio Computer 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 CCL Industries with a short position of Casio Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Casio Computer.

Diversification Opportunities for CCL Industries and Casio Computer

-0.79

Correlation Coefficient

CCL Industries  Casio Computer

Pay attention - limited upside

The 3 months correlation between CCL and Casio is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Casio Computer CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer CoLtd and CCL Industries 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 CCL Industries are associated (or correlated) with Casio Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casio Computer CoLtd has no effect on the direction of CCL Industries i.e., CCL Industries and Casio Computer go up and down completely randomly.

Pair Corralation between CCL Industries and Casio Computer

Assuming the 90 days horizon CCL Industries is expected to generate 0.93 times more return on investment than Casio Computer. However, CCL Industries is 1.08 times less risky than Casio Computer. It trades about -0.07 of its potential returns per unit of risk. Casio Computer CoLtd is currently generating about -0.1 per unit of risk. If you would invest  4,960  in CCL Industries on October 25, 2024 and sell it today you would lose (80.00) from holding CCL Industries or give up 1.61% of portfolio value over 90 days.

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

CCL Industries  vs.  Casio Computer CoLtd

CCL Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Casio Computer CoLtd

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Casio Computer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CCL Industries and Casio Computer

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

The idea behind CCL Industries and Casio Computer CoLtd 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.