Correlation Between Casio Computer and Analog Devices

Can any of the company-specific risk be diversified away by investing in both Casio Computer and Analog Devices 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 Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Casio Computer Co and Analog Devices, you can compare the effects of market volatilities on Casio Computer and Analog Devices 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 Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casio Computer and Analog Devices.

Diversification Opportunities for Casio Computer and Analog Devices

0.16

Correlation Coefficient

Casio Computer  Analog Devices

Average diversification

The 3 months correlation between Casio and Analog is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer Co and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices 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 Co are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Casio Computer i.e., Casio Computer and Analog Devices go up and down completely randomly.

Pair Corralation between Casio Computer and Analog Devices

Assuming the 90 days horizon Casio Computer Co is expected to generate 1.85 times more return on investment than Analog Devices. However, Casio Computer is 1.85 times more volatile than Analog Devices. It trades about 0.31 of its potential returns per unit of risk. Analog Devices is currently generating about 0.03 per unit of risk. If you would invest  7,098  in Casio Computer Co on September 21, 2024 and sell it today you would earn a total of  1,512  from holding Casio Computer Co or generate 21.3% return on investment over 90 days.

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

Casio Computer Co  vs.  Analog Devices

Casio Computer

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Casio Computer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Analog Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Analog Devices has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Analog Devices is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Casio Computer and Analog Devices

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

The idea behind Casio Computer Co and Analog Devices 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.