Correlation Between Poste Italiane and Casio Computer
Can any of the company-specific risk be diversified away by investing in both Poste Italiane 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 Poste Italiane and Casio Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Poste Italiane SpA and Casio Computer CoLtd, you can compare the effects of market volatilities on Poste Italiane 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 Poste Italiane with a short position of Casio Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poste Italiane and Casio Computer.
Diversification Opportunities for Poste Italiane and Casio Computer
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Poste and Casio is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Poste Italiane SpA 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 Poste Italiane 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 Poste Italiane SpA 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 Poste Italiane i.e., Poste Italiane and Casio Computer go up and down completely randomly.
Pair Corralation between Poste Italiane and Casio Computer
Assuming the 90 days horizon Poste Italiane SpA is expected to generate 0.43 times more return on investment than Casio Computer. However, Poste Italiane SpA is 2.3 times less risky than Casio Computer. It trades about 0.68 of its potential returns per unit of risk. Casio Computer CoLtd is currently generating about -0.06 per unit of risk. If you would invest 1,345 in Poste Italiane SpA on October 24, 2024 and sell it today you would earn a total of 95.00 from holding Poste Italiane SpA or generate 7.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Poste Italiane SpA vs. Casio Computer CoLtd
Performance |
| Timeline |
| Poste Italiane SpA |
| Casio Computer CoLtd |
Poste Italiane and Casio Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Poste Italiane and Casio Computer
The main advantage of trading using opposite Poste Italiane and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Poste Italiane 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.| Poste Italiane vs. Casio Computer CoLtd | Poste Italiane vs. CRISPR Therapeutics AG | Poste Italiane vs. INTERSHOP Communications Aktiengesellschaft | Poste Italiane vs. Computershare Limited |
| Casio Computer vs. Geely Automobile Holdings | Casio Computer vs. WillScot Mobile Mini | Casio Computer vs. UNIVERSAL MUSIC GROUP | Casio Computer vs. SQUIRREL MEDIA SA |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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