Correlation Between Casio Computer and EBay
Can any of the company-specific risk be diversified away by investing in both Casio Computer and EBay 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 Casio Computer and EBay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Casio Computer CoLtd and eBay Inc, you can compare the effects of market volatilities on Casio Computer and EBay 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 Casio Computer with a short position of EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casio Computer and EBay.
Diversification Opportunities for Casio Computer and EBay
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Casio and EBay is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc and Casio Computer 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 Casio Computer CoLtd are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Casio Computer i.e., Casio Computer and EBay go up and down completely randomly.
Pair Corralation between Casio Computer and EBay
Assuming the 90 days trading horizon Casio Computer CoLtd is expected to under-perform the EBay. But the stock apears to be less risky and, when comparing its historical volatility, Casio Computer CoLtd is 1.05 times less risky than EBay. The stock trades about -0.01 of its potential returns per unit of risk. The eBay Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,010 in eBay Inc on August 28, 2024 and sell it today you would earn a total of 2,036 from holding eBay Inc or generate 50.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.46% |
| Values | Daily Returns |
Casio Computer CoLtd vs. eBay Inc
Performance |
| Timeline |
| Casio Computer CoLtd |
| eBay Inc |
Casio Computer and EBay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Casio Computer and EBay
The main advantage of trading using opposite Casio Computer and EBay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casio Computer position performs unexpectedly, EBay 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 EBay will offset losses from the drop in EBay's long position.| Casio Computer vs. China Communications Services | Casio Computer vs. LION ONE METALS | Casio Computer vs. KENNAMETAL INC | Casio Computer vs. Cogent Communications Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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