Correlation Between Capcom Co and Square Enix
Can any of the company-specific risk be diversified away by investing in both Capcom Co and Square Enix 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 Capcom Co and Square Enix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capcom Co Ltd and Square Enix Holdings, you can compare the effects of market volatilities on Capcom Co and Square Enix 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 Capcom Co with a short position of Square Enix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capcom Co and Square Enix.
Diversification Opportunities for Capcom Co and Square Enix
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capcom and Square is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Capcom Co Ltd and Square Enix Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Square Enix Holdings and Capcom Co 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 Capcom Co Ltd are associated (or correlated) with Square Enix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Square Enix Holdings has no effect on the direction of Capcom Co i.e., Capcom Co and Square Enix go up and down completely randomly.
Pair Corralation between Capcom Co and Square Enix
Assuming the 90 days horizon Capcom Co Ltd is expected to generate 0.61 times more return on investment than Square Enix. However, Capcom Co Ltd is 1.64 times less risky than Square Enix. It trades about 0.08 of its potential returns per unit of risk. Square Enix Holdings is currently generating about 0.03 per unit of risk. If you would invest 1,044 in Capcom Co Ltd on August 24, 2024 and sell it today you would earn a total of 40.00 from holding Capcom Co Ltd or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capcom Co Ltd vs. Square Enix Holdings
Performance |
| Timeline |
| Capcom Co |
| Square Enix Holdings |
Capcom Co and Square Enix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capcom Co and Square Enix
The main advantage of trading using opposite Capcom Co and Square Enix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capcom Co position performs unexpectedly, Square Enix 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 Square Enix will offset losses from the drop in Square Enix's long position.| Capcom Co vs. Square Enix Holdings | Capcom Co vs. Sega Sammy Holdings | Capcom Co vs. Capcom Co | Capcom Co vs. Square Enix Holdings |
| Square Enix vs. Sega Sammy Holdings | Square Enix vs. Capcom Co Ltd | Square Enix vs. Capcom Co | Square Enix vs. CD Projekt 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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