Correlation Between Casio Computer and Veeva Systems

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

Diversification Opportunities for Casio Computer and Veeva Systems

0.24

Correlation Coefficient

Casio Computer  Veeva Systems

Modest diversification

The 3 months correlation between Casio and Veeva is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and Veeva Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veeva Systems 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 Veeva Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veeva Systems has no effect on the direction of Casio Computer i.e., Casio Computer and Veeva Systems go up and down completely randomly.

Pair Corralation between Casio Computer and Veeva Systems

Assuming the 90 days trading horizon Casio Computer is expected to generate 1.49 times less return on investment than Veeva Systems. But when comparing it to its historical volatility, Casio Computer CoLtd is 1.63 times less risky than Veeva Systems. It trades about 0.09 of its potential returns per unit of risk. Veeva Systems is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  18,660  in Veeva Systems on October 5, 2024 and sell it today you would earn a total of  2,070  from holding Veeva Systems or generate 11.09% return on investment over 90 days.

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

Casio Computer CoLtd  vs.  Veeva Systems

Casio Computer CoLtd

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Casio Computer CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile fundamental indicators, Casio Computer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Veeva Systems

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Veeva Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Veeva Systems reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Casio Computer and Veeva Systems

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

The idea behind Casio Computer CoLtd and Veeva Systems 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.