Correlation Between Casio Computer and Westinghouse Air

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

Diversification Opportunities for Casio Computer and Westinghouse Air

0.07

Correlation Coefficient

Casio Computer  Westinghouse Air

Significant diversification

The 3 months correlation between Casio and Westinghouse is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake 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 Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of Casio Computer i.e., Casio Computer and Westinghouse Air go up and down completely randomly.

Pair Corralation between Casio Computer and Westinghouse Air

Assuming the 90 days trading horizon Casio Computer is expected to generate 2.22 times less return on investment than Westinghouse Air. In addition to that, Casio Computer is 1.08 times more volatile than Westinghouse Air Brake. It trades about 0.07 of its total potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.16 per unit of volatility. If you would invest  16,178  in Westinghouse Air Brake on September 28, 2024 and sell it today you would earn a total of  2,272  from holding Westinghouse Air Brake or generate 14.04% 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.  Westinghouse Air Brake

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.

Westinghouse Air Brake

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Westinghouse Air Brake are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Westinghouse Air reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Casio Computer and Westinghouse Air

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

The idea behind Casio Computer CoLtd and Westinghouse Air Brake 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.