Correlation Between Cass Information and Toppan Printing

Can any of the company-specific risk be diversified away by investing in both Cass Information and Toppan Printing 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 Cass Information and Toppan Printing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cass Information Systems and Toppan Printing, you can compare the effects of market volatilities on Cass Information and Toppan Printing 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 Cass Information with a short position of Toppan Printing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and Toppan Printing.

Diversification Opportunities for Cass Information and Toppan Printing

-0.01

Correlation Coefficient

Cass Information  Toppan Printing

Good diversification

The 3 months correlation between Cass and Toppan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Toppan Printing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toppan Printing and Cass Information 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 Cass Information Systems are associated (or correlated) with Toppan Printing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toppan Printing has no effect on the direction of Cass Information i.e., Cass Information and Toppan Printing go up and down completely randomly.

Pair Corralation between Cass Information and Toppan Printing

Given the investment horizon of 90 days Cass Information is expected to generate 8.04 times less return on investment than Toppan Printing. But when comparing it to its historical volatility, Cass Information Systems is 2.36 times less risky than Toppan Printing. It trades about 0.01 of its potential returns per unit of risk. Toppan Printing is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,355  in Toppan Printing on October 25, 2024 and sell it today you would earn a total of  65.00  from holding Toppan Printing or generate 4.8% return on investment over 90 days.

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

Cass Information Systems  vs.  Toppan Printing

Cass Information Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cass Information Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cass Information is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Toppan Printing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Toppan Printing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Toppan Printing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cass Information and Toppan Printing

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

The idea behind Cass Information Systems and Toppan Printing 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.