Correlation Between Allegheny Technologies and Casio Computer

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

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

Diversification Opportunities for Allegheny Technologies and Casio Computer

-0.29

Correlation Coefficient

Allegheny Technologies  Casio Computer

Very good diversification

The 3 months correlation between Allegheny and Casio is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Casio Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer and Allegheny Technologies 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 Allegheny Technologies Incorporated 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 Allegheny Technologies i.e., Allegheny Technologies and Casio Computer go up and down completely randomly.

Pair Corralation between Allegheny Technologies and Casio Computer

Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to under-perform the Casio Computer. But the stock apears to be less risky and, when comparing its historical volatility, Allegheny Technologies Incorporated is 2.98 times less risky than Casio Computer. The stock trades about -0.12 of its potential returns per unit of risk. The Casio Computer Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  8,343  in Casio Computer Co on October 14, 2024 and sell it today you would lose (204.00) from holding Casio Computer Co or give up 2.45% of portfolio value over 90 days.

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

Allegheny Technologies Incorpo  vs.  Casio Computer Co

Allegheny Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegheny Technologies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Casio Computer

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Casio Computer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allegheny Technologies and Casio Computer

The main advantage of trading using opposite Allegheny Technologies and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies 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 Allegheny Technologies Incorporated 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.