Correlation Between Casio Computer and Japan Post

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

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

Diversification Opportunities for Casio Computer and Japan Post

0.35

Correlation Coefficient

Casio Computer  Japan Post

Weak diversification

The 3 months correlation between Casio and Japan is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and Japan Post Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Post Insurance and Casio Computer 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 Casio Computer CoLtd are associated (or correlated) with Japan Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Post Insurance has no effect on the direction of Casio Computer i.e., Casio Computer and Japan Post go up and down completely randomly.

Pair Corralation between Casio Computer and Japan Post

Assuming the 90 days trading horizon Casio Computer CoLtd is expected to under-perform the Japan Post. But the stock apears to be less risky and, when comparing its historical volatility, Casio Computer CoLtd is 1.04 times less risky than Japan Post. The stock trades about -0.1 of its potential returns per unit of risk. The Japan Post Insurance is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,760  in Japan Post Insurance on October 25, 2024 and sell it today you would lose (20.00) from holding Japan Post Insurance or give up 1.14% of portfolio value over 90 days.

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

Casio Computer CoLtd  vs.  Japan Post Insurance

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.

Japan Post Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Post Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Japan Post unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Casio Computer and Japan Post

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

The idea behind Casio Computer CoLtd and Japan Post Insurance 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.