Correlation Between Sony Group and Casio Computer

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

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

Diversification Opportunities for Sony Group and Casio Computer

0.41

Correlation Coefficient

Sony Group  Casio Computer

Very weak diversification

The 3 months correlation between Sony and Casio is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group Corp and Casio Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer and Sony Group 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 Sony Group Corp 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 Sony Group i.e., Sony Group and Casio Computer go up and down completely randomly.

Pair Corralation between Sony Group and Casio Computer

Given the investment horizon of 90 days Sony Group Corp is expected to generate 0.86 times more return on investment than Casio Computer. However, Sony Group Corp is 1.16 times less risky than Casio Computer. It trades about 0.18 of its potential returns per unit of risk. Casio Computer Co is currently generating about 0.02 per unit of risk. If you would invest  2,121  in Sony Group Corp on December 28, 2024 and sell it today you would earn a total of  443.00  from holding Sony Group Corp or generate 20.89% return on investment over 90 days.

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

Sony Group Corp  vs.  Casio Computer Co

Sony Group Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Sony Group showed solid returns over the last few months and may actually be approaching a breakup point.

Casio Computer

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer Co are ranked lower than 1 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sony Group and Casio Computer

The main advantage of trading using opposite Sony Group and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony Group 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 Sony Group Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.