Correlation Between Casio Computer and Federal Agricultural

Can any of the company-specific risk be diversified away by investing in both Casio Computer and Federal Agricultural 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 Federal Agricultural 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 Federal Agricultural Mortgage, you can compare the effects of market volatilities on Casio Computer and Federal Agricultural 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 Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casio Computer and Federal Agricultural.

Diversification Opportunities for Casio Computer and Federal Agricultural

0.22

Correlation Coefficient

Casio Computer  Federal Agricultural

Modest diversification

The 3 months correlation between Casio and Federal is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural 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 Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of Casio Computer i.e., Casio Computer and Federal Agricultural go up and down completely randomly.

Pair Corralation between Casio Computer and Federal Agricultural

Assuming the 90 days trading horizon Casio Computer CoLtd is expected to generate 0.73 times more return on investment than Federal Agricultural. However, Casio Computer CoLtd is 1.38 times less risky than Federal Agricultural. It trades about 0.16 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.08 per unit of risk. If you would invest  676.00  in Casio Computer CoLtd on October 24, 2024 and sell it today you would earn a total of  108.00  from holding Casio Computer CoLtd or generate 15.98% return on investment over 90 days.

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

Casio Computer CoLtd  vs.  Federal Agricultural Mortgage

Casio Computer CoLtd

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 12 (%) 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.

Federal Agricultural

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Agricultural Mortgage are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Federal Agricultural may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Casio Computer and Federal Agricultural

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

The idea behind Casio Computer CoLtd and Federal Agricultural Mortgage 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..