Correlation Between Casio Computer and Procter Gamble

Can any of the company-specific risk be diversified away by investing in both Casio Computer and Procter Gamble 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 Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Casio Computer Co and Procter Gamble, you can compare the effects of market volatilities on Casio Computer and Procter Gamble 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 Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casio Computer and Procter Gamble.

Diversification Opportunities for Casio Computer and Procter Gamble

0.2

Correlation Coefficient

Casio Computer  Procter Gamble

Modest diversification

The 3 months correlation between Casio and Procter is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer Co and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Co are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Casio Computer i.e., Casio Computer and Procter Gamble go up and down completely randomly.

Pair Corralation between Casio Computer and Procter Gamble

Assuming the 90 days horizon Casio Computer Co is expected to under-perform the Procter Gamble. In addition to that, Casio Computer is 3.08 times more volatile than Procter Gamble. It trades about -0.01 of its total potential returns per unit of risk. Procter Gamble is currently generating about 0.0 per unit of volatility. If you would invest  17,246  in Procter Gamble on September 12, 2024 and sell it today you would lose (18.00) from holding Procter Gamble or give up 0.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Casio Computer Co  vs.  Procter Gamble

Casio Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Casio Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Casio Computer is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Procter Gamble

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Casio Computer and Procter Gamble

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

The idea behind Casio Computer Co and Procter Gamble 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.