Correlation Between Casio Computer and ING Groep

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

Diversification Opportunities for Casio Computer and ING Groep

-0.17

Correlation Coefficient

Casio Computer  ING Groep

Good diversification

The 3 months correlation between Casio and ING is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and ING Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Groep NV 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 ING Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Groep NV has no effect on the direction of Casio Computer i.e., Casio Computer and ING Groep go up and down completely randomly.

Pair Corralation between Casio Computer and ING Groep

Assuming the 90 days trading horizon Casio Computer CoLtd is expected to under-perform the ING Groep. But the stock apears to be less risky and, when comparing its historical volatility, Casio Computer CoLtd is 1.27 times less risky than ING Groep. The stock trades about -0.03 of its potential returns per unit of risk. The ING Groep NV is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,475  in ING Groep NV on December 19, 2024 and sell it today you would earn a total of  386.00  from holding ING Groep NV or generate 26.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Casio Computer CoLtd  vs.  ING Groep NV

Casio Computer CoLtd

Risk-Adjusted Performance

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.

ING Groep NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ING Groep NV are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ING Groep reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Casio Computer and ING Groep

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

The idea behind Casio Computer CoLtd and ING Groep NV 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.