Correlation Between Casio Computer and AENA SME

Can any of the company-specific risk be diversified away by investing in both Casio Computer and AENA SME 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 AENA SME 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 AENA SME UNSPADR110, you can compare the effects of market volatilities on Casio Computer and AENA SME 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 AENA SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casio Computer and AENA SME.

Diversification Opportunities for Casio Computer and AENA SME

0.26

Correlation Coefficient

Casio Computer  AENA SME

Modest diversification

The 3 months correlation between Casio and AENA is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and AENA SME UNSPADR110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AENA SME UNSPADR110 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 AENA SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AENA SME UNSPADR110 has no effect on the direction of Casio Computer i.e., Casio Computer and AENA SME go up and down completely randomly.

Pair Corralation between Casio Computer and AENA SME

Assuming the 90 days trading horizon Casio Computer CoLtd is expected to under-perform the AENA SME. In addition to that, Casio Computer is 1.12 times more volatile than AENA SME UNSPADR110. It trades about -0.05 of its total potential returns per unit of risk. AENA SME UNSPADR110 is currently generating about 0.06 per unit of volatility. If you would invest  1,910  in AENA SME UNSPADR110 on October 21, 2024 and sell it today you would earn a total of  20.00  from holding AENA SME UNSPADR110 or generate 1.05% 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.  AENA SME UNSPADR110

Casio Computer CoLtd

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Casio Computer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AENA SME UNSPADR110

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AENA SME UNSPADR110 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AENA SME is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Casio Computer and AENA SME

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

The idea behind Casio Computer CoLtd and AENA SME UNSPADR110 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.