Correlation Between Casio Computer and X FAB
Can any of the company-specific risk be diversified away by investing in both Casio Computer and X FAB 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 X FAB 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Casio Computer and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casio Computer and X FAB.
Diversification Opportunities for Casio Computer and X FAB
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Casio and XFB is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Casio Computer i.e., Casio Computer and X FAB go up and down completely randomly.
Pair Corralation between Casio Computer and X FAB
Assuming the 90 days trading horizon Casio Computer is expected to generate 1.19 times less return on investment than X FAB. But when comparing it to its historical volatility, Casio Computer CoLtd is 1.32 times less risky than X FAB. It trades about 0.18 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 415.00 in X FAB Silicon Foundries on September 3, 2024 and sell it today you would earn a total of 35.00 from holding X FAB Silicon Foundries or generate 8.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Casio Computer CoLtd vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Casio Computer CoLtd |
| X FAB Silicon |
Casio Computer and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Casio Computer and X FAB
The main advantage of trading using opposite Casio Computer and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casio Computer position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Casio Computer vs. Apple Inc | Casio Computer vs. Samsung Electronics Co | Casio Computer vs. Samsung Electronics Co | Casio Computer vs. Xiaomi |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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