Correlation Between Casio Computer and Brinker International

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

Diversification Opportunities for Casio Computer and Brinker International

0.65

Correlation Coefficient

Casio Computer  Brinker International

Poor diversification

The 3 months correlation between Casio and Brinker is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International 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 Brinker International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinker International has no effect on the direction of Casio Computer i.e., Casio Computer and Brinker International go up and down completely randomly.

Pair Corralation between Casio Computer and Brinker International

Assuming the 90 days trading horizon Casio Computer CoLtd is expected to under-perform the Brinker International. But the stock apears to be less risky and, when comparing its historical volatility, Casio Computer CoLtd is 1.96 times less risky than Brinker International. The stock trades about -0.16 of its potential returns per unit of risk. The Brinker International is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  13,200  in Brinker International on October 26, 2024 and sell it today you would earn a total of  1,100  from holding Brinker International or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Casio Computer CoLtd  vs.  Brinker International

Casio Computer CoLtd

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Casio Computer reported solid returns over the last few months and may actually be approaching a breakup point.

Brinker International

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Brinker International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Casio Computer and Brinker International

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

The idea behind Casio Computer CoLtd and Brinker International 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.