Correlation Between Casio Computer and Sharp Corp

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

Diversification Opportunities for Casio Computer and Sharp Corp

0.2

Correlation Coefficient

Casio Computer  Sharp Corp

Modest diversification

The 3 months correlation between Casio and Sharp is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer Co and Sharp Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharp Corp ADR 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 Sharp Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharp Corp ADR has no effect on the direction of Casio Computer i.e., Casio Computer and Sharp Corp go up and down completely randomly.

Pair Corralation between Casio Computer and Sharp Corp

Assuming the 90 days horizon Casio Computer Co is expected to under-perform the Sharp Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Casio Computer Co is 1.74 times less risky than Sharp Corp. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Sharp Corp ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  152.00  in Sharp Corp ADR on September 12, 2024 and sell it today you would lose (1.00) from holding Sharp Corp ADR or give up 0.66% of portfolio value over 90 days.

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

Casio Computer Co  vs.  Sharp Corp ADR

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Sharp Corp ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sharp Corp ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Sharp Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Casio Computer and Sharp Corp

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

The idea behind Casio Computer Co and Sharp Corp ADR 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.