Correlation Between Luxfer Holdings and Casio Computer

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

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

Diversification Opportunities for Luxfer Holdings and Casio Computer

-0.71

Correlation Coefficient

Luxfer Holdings  Casio Computer

Pay attention - limited upside

The 3 months correlation between Luxfer and Casio is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Casio Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer and Luxfer Holdings 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 Luxfer Holdings PLC 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 has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Casio Computer go up and down completely randomly.

Pair Corralation between Luxfer Holdings and Casio Computer

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to generate 0.92 times more return on investment than Casio Computer. However, Luxfer Holdings PLC is 1.09 times less risky than Casio Computer. It trades about 0.02 of its potential returns per unit of risk. Casio Computer Co is currently generating about -0.05 per unit of risk. If you would invest  1,430  in Luxfer Holdings PLC on September 2, 2024 and sell it today you would earn a total of  6.00  from holding Luxfer Holdings PLC or generate 0.42% return on investment over 90 days.

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

Luxfer Holdings PLC  vs.  Casio Computer Co

Luxfer Holdings PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Luxfer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Luxfer Holdings and Casio Computer

The main advantage of trading using opposite Luxfer Holdings and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings 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 Luxfer Holdings PLC and Casio Computer Co 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.