Correlation Between X FAB and Casio Computer
Can any of the company-specific risk be diversified away by investing in both X FAB 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 X FAB and Casio Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Casio Computer CoLtd, you can compare the effects of market volatilities on X FAB 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 X FAB with a short position of Casio Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Casio Computer.
Diversification Opportunities for X FAB and Casio Computer
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between XFB and Casio is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries 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 X FAB 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 X FAB Silicon Foundries 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 X FAB i.e., X FAB and Casio Computer go up and down completely randomly.
Pair Corralation between X FAB and Casio Computer
Assuming the 90 days trading horizon X FAB is expected to generate 1.23 times less return on investment than Casio Computer. In addition to that, X FAB is 1.33 times more volatile than Casio Computer CoLtd. It trades about 0.11 of its total potential returns per unit of risk. Casio Computer CoLtd is currently generating about 0.18 per unit of volatility. If you would invest 663.00 in Casio Computer CoLtd on September 4, 2024 and sell it today you would earn a total of 48.00 from holding Casio Computer CoLtd or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Casio Computer CoLtd
Performance |
| Timeline |
| X FAB Silicon |
| Casio Computer CoLtd |
X FAB and Casio Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Casio Computer
The main advantage of trading using opposite X FAB and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB 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 X FAB Silicon Foundries 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.| Casio Computer vs. Apple Inc | Casio Computer vs. Samsung Electronics Co | Casio Computer vs. Xiaomi | Casio Computer vs. Panasonic Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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