Correlation Between Casio Computer and Western Digital

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

Diversification Opportunities for Casio Computer and Western Digital

-0.08

Correlation Coefficient

Casio Computer  Western Digital

Good diversification

The 3 months correlation between Casio and Western is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer Co and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital 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 Western Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Digital has no effect on the direction of Casio Computer i.e., Casio Computer and Western Digital go up and down completely randomly.

Pair Corralation between Casio Computer and Western Digital

Assuming the 90 days horizon Casio Computer Co is expected to generate 1.51 times more return on investment than Western Digital. However, Casio Computer is 1.51 times more volatile than Western Digital. It trades about 0.25 of its potential returns per unit of risk. Western Digital is currently generating about -0.26 per unit of risk. If you would invest  7,263  in Casio Computer Co on September 24, 2024 and sell it today you would earn a total of  1,347  from holding Casio Computer Co or generate 18.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Casio Computer Co  vs.  Western Digital

Casio Computer

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Casio Computer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Western Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Casio Computer and Western Digital

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

The idea behind Casio Computer Co and Western Digital 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.