Correlation Between Casio Computer and WT Offshore

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

Diversification Opportunities for Casio Computer and WT Offshore

-0.01

Correlation Coefficient

Casio Computer  WT Offshore

Good diversification

The 3 months correlation between Casio and WTI is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer Co and WT Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Offshore 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 WT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Offshore has no effect on the direction of Casio Computer i.e., Casio Computer and WT Offshore go up and down completely randomly.

Pair Corralation between Casio Computer and WT Offshore

Assuming the 90 days horizon Casio Computer Co is expected to generate 0.84 times more return on investment than WT Offshore. However, Casio Computer Co is 1.2 times less risky than WT Offshore. It trades about 0.02 of its potential returns per unit of risk. WT Offshore is currently generating about -0.07 per unit of risk. If you would invest  8,164  in Casio Computer Co on September 17, 2024 and sell it today you would earn a total of  179.00  from holding Casio Computer Co or generate 2.19% 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.  WT Offshore

Casio Computer

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

WT Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WT Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent 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 WT Offshore

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

The idea behind Casio Computer Co and WT Offshore 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.