Correlation Between Casio Computer and ENTERGY

Can any of the company-specific risk be diversified away by investing in both Casio Computer and ENTERGY 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 ENTERGY 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 ENTERGY, you can compare the effects of market volatilities on Casio Computer and ENTERGY 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 ENTERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casio Computer and ENTERGY.

Diversification Opportunities for Casio Computer and ENTERGY

-0.18

Correlation Coefficient

Casio Computer  ENTERGY

Good diversification

The 3 months correlation between Casio and ENTERGY is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and ENTERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENTERGY 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 ENTERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENTERGY has no effect on the direction of Casio Computer i.e., Casio Computer and ENTERGY go up and down completely randomly.

Pair Corralation between Casio Computer and ENTERGY

Assuming the 90 days trading horizon Casio Computer is expected to generate 2.2 times less return on investment than ENTERGY. But when comparing it to its historical volatility, Casio Computer CoLtd is 1.67 times less risky than ENTERGY. It trades about 0.1 of its potential returns per unit of risk. ENTERGY is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  5,701  in ENTERGY on September 18, 2024 and sell it today you would earn a total of  1,249  from holding ENTERGY or generate 21.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Casio Computer CoLtd  vs.  ENTERGY

Casio Computer CoLtd

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Casio Computer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ENTERGY

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ENTERGY are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, ENTERGY exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Casio Computer and ENTERGY

The main advantage of trading using opposite Casio Computer and ENTERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casio Computer position performs unexpectedly, ENTERGY 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 ENTERGY will offset losses from the drop in ENTERGY's long position.

The idea behind Casio Computer CoLtd and ENTERGY 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.