Correlation Between Casio Computer and TCL Electronics

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

Diversification Opportunities for Casio Computer and TCL Electronics

-0.18

Correlation Coefficient

Casio Computer  TCL Electronics

Good diversification

The 3 months correlation between Casio and TCL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer Co and TCL Electronics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCL Electronics Holdings 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 TCL Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCL Electronics Holdings has no effect on the direction of Casio Computer i.e., Casio Computer and TCL Electronics go up and down completely randomly.

Pair Corralation between Casio Computer and TCL Electronics

Assuming the 90 days horizon Casio Computer Co is expected to under-perform the TCL Electronics. But the pink sheet apears to be less risky and, when comparing its historical volatility, Casio Computer Co is 1.69 times less risky than TCL Electronics. The pink sheet trades about -0.01 of its potential returns per unit of risk. The TCL Electronics Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  65.00  in TCL Electronics Holdings on September 12, 2024 and sell it today you would earn a total of  1.00  from holding TCL Electronics Holdings or generate 1.54% return on investment over 90 days.

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

Casio Computer Co  vs.  TCL Electronics Holdings

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.

TCL Electronics Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TCL Electronics Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, TCL Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Casio Computer and TCL Electronics

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

The idea behind Casio Computer Co and TCL Electronics Holdings 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.