Correlation Between COVIVIO HOTELS and Casio Computer

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

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

Diversification Opportunities for COVIVIO HOTELS and Casio Computer

-0.07

Correlation Coefficient

COVIVIO HOTELS  Casio Computer

Good diversification

The 3 months correlation between COVIVIO and Casio is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding COVIVIO HOTELS INH 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 COVIVIO HOTELS 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 COVIVIO HOTELS INH 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 COVIVIO HOTELS i.e., COVIVIO HOTELS and Casio Computer go up and down completely randomly.

Pair Corralation between COVIVIO HOTELS and Casio Computer

Assuming the 90 days horizon COVIVIO HOTELS INH is expected to generate 1.45 times more return on investment than Casio Computer. However, COVIVIO HOTELS is 1.45 times more volatile than Casio Computer CoLtd. It trades about 0.05 of its potential returns per unit of risk. Casio Computer CoLtd is currently generating about -0.06 per unit of risk. If you would invest  1,985  in COVIVIO HOTELS INH on December 22, 2024 and sell it today you would earn a total of  85.00  from holding COVIVIO HOTELS INH or generate 4.28% return on investment over 90 days.

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

COVIVIO HOTELS INH  vs.  Casio Computer CoLtd

COVIVIO HOTELS INH

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COVIVIO HOTELS INH are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, COVIVIO HOTELS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Casio Computer CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Casio Computer CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Casio Computer is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with COVIVIO HOTELS and Casio Computer

The main advantage of trading using opposite COVIVIO HOTELS and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COVIVIO HOTELS 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 COVIVIO HOTELS INH 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.