Correlation Between Casio Computer and Industria

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

Diversification Opportunities for Casio Computer and Industria

0.53

Correlation Coefficient

Casio Computer  Industria

Very weak diversification

The 3 months correlation between Casio and Industria is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and Industria de Diseno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industria de Diseno 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 Industria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industria de Diseno has no effect on the direction of Casio Computer i.e., Casio Computer and Industria go up and down completely randomly.

Pair Corralation between Casio Computer and Industria

Assuming the 90 days trading horizon Casio Computer CoLtd is expected to generate 0.59 times more return on investment than Industria. However, Casio Computer CoLtd is 1.69 times less risky than Industria. It trades about -0.06 of its potential returns per unit of risk. Industria de Diseno is currently generating about -0.05 per unit of risk. If you would invest  787.00  in Casio Computer CoLtd on December 22, 2024 and sell it today you would lose (36.00) from holding Casio Computer CoLtd or give up 4.57% of portfolio value over 90 days.

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

Casio Computer CoLtd  vs.  Industria de Diseno

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.

Industria de Diseno

Risk-Adjusted Performance

Very Weak

Over the last 90 days Industria de Diseno has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Industria 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 Industria

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

The idea behind Casio Computer CoLtd and Industria de Diseno 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.