Correlation Between Semiconductor Manufacturing and Casio Computer

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

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

Diversification Opportunities for Semiconductor Manufacturing and Casio Computer

-0.04

Correlation Coefficient

Semiconductor Manufacturing  Casio Computer

Good diversification

The 3 months correlation between Semiconductor and Casio is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing In 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 Semiconductor Manufacturing 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 Semiconductor Manufacturing International 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 Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Casio Computer go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Casio Computer

Assuming the 90 days trading horizon Semiconductor Manufacturing International is expected to generate 2.4 times more return on investment than Casio Computer. However, Semiconductor Manufacturing is 2.4 times more volatile than Casio Computer CoLtd. It trades about 0.08 of its potential returns per unit of risk. Casio Computer CoLtd is currently generating about 0.08 per unit of risk. If you would invest  296.00  in Semiconductor Manufacturing International on October 11, 2024 and sell it today you would earn a total of  44.00  from holding Semiconductor Manufacturing International or generate 14.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Semiconductor Manufacturing In  vs.  Casio Computer CoLtd

Semiconductor Manufacturing

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Semiconductor Manufacturing reported solid returns over the last few months and may actually be approaching a breakup point.

Casio Computer CoLtd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Casio Computer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Semiconductor Manufacturing and Casio Computer

The main advantage of trading using opposite Semiconductor Manufacturing and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semiconductor Manufacturing 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 Semiconductor Manufacturing International 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .