Correlation Between Take Two and Capcom Co

Can any of the company-specific risk be diversified away by investing in both Take Two and Capcom Co 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 Capcom Co 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 Capcom Co Ltd, you can compare the effects of market volatilities on Take Two and Capcom Co 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 Capcom Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Capcom Co.

Diversification Opportunities for Take Two and Capcom Co

0.59

Correlation Coefficient

Take Two  Capcom Co

Very weak diversification

The 3 months correlation between Take and Capcom is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Capcom Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capcom Co 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 Capcom Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capcom Co has no effect on the direction of Take Two i.e., Take Two and Capcom Co go up and down completely randomly.

Pair Corralation between Take Two and Capcom Co

Given the investment horizon of 90 days Take Two Interactive Software is expected to generate 1.11 times more return on investment than Capcom Co. However, Take Two is 1.11 times more volatile than Capcom Co Ltd. It trades about -0.09 of its potential returns per unit of risk. Capcom Co Ltd is currently generating about -0.25 per unit of risk. If you would invest  18,790  in Take Two Interactive Software on October 10, 2024 and sell it today you would lose (615.00) from holding Take Two Interactive Software or give up 3.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Take Two Interactive Software  vs.  Capcom Co Ltd

Take Two Interactive

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Take Two displayed solid returns over the last few months and may actually be approaching a breakup point.

Capcom Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capcom Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Capcom Co is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Take Two and Capcom Co

The main advantage of trading using opposite Take Two and Capcom Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Capcom Co 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 Capcom Co will offset losses from the drop in Capcom Co's long position.

The idea behind Take Two Interactive Software and Capcom Co Ltd 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.