Correlation Between Take Two and Casio Computer

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

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

Diversification Opportunities for Take Two and Casio Computer

0.47

Correlation Coefficient

Take Two  Casio Computer

Very weak diversification

The 3 months correlation between Take and Casio is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software 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 Take Two 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 Take Two Interactive Software 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 Take Two i.e., Take Two and Casio Computer go up and down completely randomly.

Pair Corralation between Take Two and Casio Computer

Assuming the 90 days horizon Take Two Interactive Software is expected to generate 0.97 times more return on investment than Casio Computer. However, Take Two Interactive Software is 1.04 times less risky than Casio Computer. It trades about 0.19 of its potential returns per unit of risk. Casio Computer CoLtd is currently generating about 0.17 per unit of risk. If you would invest  15,068  in Take Two Interactive Software on October 25, 2024 and sell it today you would earn a total of  2,768  from holding Take Two Interactive Software or generate 18.37% return on investment over 90 days.

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

Take Two Interactive Software  vs.  Casio Computer CoLtd

Take Two Interactive

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Take Two reported solid returns over the last few months and may actually be approaching a breakup point.

Casio Computer CoLtd

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Casio Computer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Take Two and Casio Computer

The main advantage of trading using opposite Take Two and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two 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 Take Two Interactive Software 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.