Correlation Between AECOM TECHNOLOGY and Casio Computer

Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY and Casio Computer 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 AECOM TECHNOLOGY and Casio Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AECOM TECHNOLOGY and Casio Computer CoLtd, you can compare the effects of market volatilities on AECOM TECHNOLOGY and Casio Computer 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 AECOM TECHNOLOGY with a short position of Casio Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and Casio Computer.

Diversification Opportunities for AECOM TECHNOLOGY and Casio Computer

-0.59

Correlation Coefficient

AECOM TECHNOLOGY  Casio Computer

Excellent diversification

The 3 months correlation between AECOM and Casio is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and Casio Computer CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer CoLtd and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY are associated (or correlated) with Casio Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casio Computer CoLtd has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and Casio Computer go up and down completely randomly.

Pair Corralation between AECOM TECHNOLOGY and Casio Computer

Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to under-perform the Casio Computer. In addition to that, AECOM TECHNOLOGY is 1.12 times more volatile than Casio Computer CoLtd. It trades about -0.17 of its total potential returns per unit of risk. Casio Computer CoLtd is currently generating about 0.02 per unit of volatility. If you would invest  797.00  in Casio Computer CoLtd on December 2, 2024 and sell it today you would earn a total of  4.00  from holding Casio Computer CoLtd or generate 0.5% return on investment over 90 days.

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

AECOM TECHNOLOGY  vs.  Casio Computer CoLtd

AECOM TECHNOLOGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days AECOM TECHNOLOGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Casio Computer CoLtd

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Casio Computer may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AECOM TECHNOLOGY and Casio Computer

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

The idea behind AECOM TECHNOLOGY and Casio Computer CoLtd 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.