Correlation Between Newmont and Casio Computer

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

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

Diversification Opportunities for Newmont and Casio Computer

-0.05

Correlation Coefficient

Newmont  Casio Computer

Good diversification

The 3 months correlation between Newmont and Casio is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Newmont 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 Newmont 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 Newmont 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 Newmont i.e., Newmont and Casio Computer go up and down completely randomly.

Pair Corralation between Newmont and Casio Computer

Assuming the 90 days trading horizon Newmont is expected to generate 1.77 times more return on investment than Casio Computer. However, Newmont is 1.77 times more volatile than Casio Computer CoLtd. It trades about 0.15 of its potential returns per unit of risk. Casio Computer CoLtd is currently generating about -0.04 per unit of risk. If you would invest  3,623  in Newmont on December 23, 2024 and sell it today you would earn a total of  694.00  from holding Newmont or generate 19.16% return on investment over 90 days.

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

Newmont  vs.  Casio Computer CoLtd

Newmont

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady primary indicators, Newmont unveiled solid returns over the last few months and may actually be approaching a breakup point.

Casio Computer CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Casio Computer CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Casio Computer is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Newmont and Casio Computer

The main advantage of trading using opposite Newmont and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmont 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 Newmont 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..