Correlation Between Casio Computer and Tradegate

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

Diversification Opportunities for Casio Computer and Tradegate

0.04

Correlation Coefficient

Casio Computer  Tradegate

Significant diversification

The 3 months correlation between Casio and Tradegate is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and Tradegate AG Wertpapierhandels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradegate AG Wertpap 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 Tradegate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradegate AG Wertpap has no effect on the direction of Casio Computer i.e., Casio Computer and Tradegate go up and down completely randomly.

Pair Corralation between Casio Computer and Tradegate

Assuming the 90 days trading horizon Casio Computer CoLtd is expected to generate 0.84 times more return on investment than Tradegate. However, Casio Computer CoLtd is 1.19 times less risky than Tradegate. It trades about 0.09 of its potential returns per unit of risk. Tradegate AG Wertpapierhandelsbank is currently generating about -0.08 per unit of risk. If you would invest  682.00  in Casio Computer CoLtd on September 29, 2024 and sell it today you would earn a total of  105.00  from holding Casio Computer CoLtd or generate 15.4% return on investment over 90 days.

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

Casio Computer CoLtd  vs.  Tradegate AG Wertpapierhandels

Casio Computer CoLtd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Casio Computer CoLtd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Casio Computer is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Tradegate AG Wertpap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tradegate AG Wertpapierhandelsbank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tradegate is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Casio Computer and Tradegate

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

The idea behind Casio Computer CoLtd and Tradegate AG Wertpapierhandelsbank 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.