Correlation Between Casio Computer and Apple

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

Diversification Opportunities for Casio Computer and Apple

-0.58

Correlation Coefficient

Casio Computer  Apple

Excellent diversification

The 3 months correlation between Casio and Apple is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Casio Computer i.e., Casio Computer and Apple go up and down completely randomly.

Pair Corralation between Casio Computer and Apple

Assuming the 90 days trading horizon Casio Computer is expected to generate 13.18 times less return on investment than Apple. But when comparing it to its historical volatility, Casio Computer CoLtd is 1.04 times less risky than Apple. It trades about 0.01 of its potential returns per unit of risk. Apple Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  19,860  in Apple Inc on September 4, 2024 and sell it today you would earn a total of  2,585  from holding Apple Inc or generate 13.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Casio Computer CoLtd  vs.  Apple Inc

Casio Computer CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Apple Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Casio Computer and Apple

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

The idea behind Casio Computer CoLtd and Apple Inc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.