Correlation Between Casio Computer and Sunny Optical

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

Diversification Opportunities for Casio Computer and Sunny Optical

-0.34

Correlation Coefficient

Casio Computer  Sunny Optical

Very good diversification

The 3 months correlation between Casio and Sunny is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical Technology 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 Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of Casio Computer i.e., Casio Computer and Sunny Optical go up and down completely randomly.

Pair Corralation between Casio Computer and Sunny Optical

Assuming the 90 days trading horizon Casio Computer is expected to generate 2.97 times less return on investment than Sunny Optical. But when comparing it to its historical volatility, Casio Computer CoLtd is 1.97 times less risky than Sunny Optical. It trades about 0.25 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  573.00  in Sunny Optical Technology on September 5, 2024 and sell it today you would earn a total of  211.00  from holding Sunny Optical Technology or generate 36.82% 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.  Sunny Optical Technology

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.

Sunny Optical Technology

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Casio Computer and Sunny Optical

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

The idea behind Casio Computer CoLtd and Sunny Optical Technology 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.