Correlation Between Allient and Casio Computer

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

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

Diversification Opportunities for Allient and Casio Computer

-0.02

Correlation Coefficient

Allient  Casio Computer

Good diversification

The 3 months correlation between Allient and Casio is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Casio Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer and Allient 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 Allient 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 has no effect on the direction of Allient i.e., Allient and Casio Computer go up and down completely randomly.

Pair Corralation between Allient and Casio Computer

Given the investment horizon of 90 days Allient is expected to under-perform the Casio Computer. But the stock apears to be less risky and, when comparing its historical volatility, Allient is 1.37 times less risky than Casio Computer. The stock trades about -0.1 of its potential returns per unit of risk. The Casio Computer Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  7,098  in Casio Computer Co on September 21, 2024 and sell it today you would earn a total of  1,512  from holding Casio Computer Co or generate 21.3% return on investment over 90 days.

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

Allient  vs.  Casio Computer Co

Allient

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Casio Computer

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Casio Computer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Allient and Casio Computer

The main advantage of trading using opposite Allient and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allient 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 Allient and Casio Computer 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.