Correlation Between UmweltBank and Casio Computer

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

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

Diversification Opportunities for UmweltBank and Casio Computer

0.45

Correlation Coefficient

UmweltBank  Casio Computer

Very weak diversification

The 3 months correlation between UmweltBank and Casio is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding UmweltBank AG 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 UmweltBank 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 UmweltBank AG 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 UmweltBank i.e., UmweltBank and Casio Computer go up and down completely randomly.

Pair Corralation between UmweltBank and Casio Computer

Assuming the 90 days trading horizon UmweltBank is expected to generate 3.59 times less return on investment than Casio Computer. In addition to that, UmweltBank is 1.16 times more volatile than Casio Computer CoLtd. It trades about 0.04 of its total potential returns per unit of risk. Casio Computer CoLtd is currently generating about 0.16 per unit of volatility. If you would invest  676.00  in Casio Computer CoLtd on October 24, 2024 and sell it today you would earn a total of  108.00  from holding Casio Computer CoLtd or generate 15.98% return on investment over 90 days.

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

UmweltBank AG  vs.  Casio Computer CoLtd

UmweltBank AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UmweltBank AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, UmweltBank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Casio Computer CoLtd

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 12 (%) 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 UmweltBank and Casio Computer

The main advantage of trading using opposite UmweltBank and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UmweltBank 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 UmweltBank AG 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.