Correlation Between Casio Computer and Allegheny Technologies

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

Diversification Opportunities for Casio Computer and Allegheny Technologies

0.21

Correlation Coefficient

Casio Computer  Allegheny Technologies

Modest diversification

The 3 months correlation between Casio and Allegheny is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer Co and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies 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 Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of Casio Computer i.e., Casio Computer and Allegheny Technologies go up and down completely randomly.

Pair Corralation between Casio Computer and Allegheny Technologies

Assuming the 90 days horizon Casio Computer Co is expected to generate 3.15 times more return on investment than Allegheny Technologies. However, Casio Computer is 3.15 times more volatile than Allegheny Technologies Incorporated. It trades about 0.12 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about -0.29 per unit of risk. If you would invest  7,263  in Casio Computer Co on September 26, 2024 and sell it today you would earn a total of  617.00  from holding Casio Computer Co or generate 8.5% 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 Co  vs.  Allegheny Technologies Incorpo

Casio Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Casio Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Casio Computer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Allegheny Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegheny Technologies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Casio Computer and Allegheny Technologies

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

The idea behind Casio Computer Co and Allegheny Technologies Incorporated 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.