Correlation Between NioCorp Developments and Casio Computer

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

By analyzing existing cross correlation between NioCorp Developments Ltd and Casio Computer Co, you can compare the effects of market volatilities on NioCorp Developments 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 NioCorp Developments with a short position of Casio Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Casio Computer.

Diversification Opportunities for NioCorp Developments and Casio Computer

0.66

Correlation Coefficient

NioCorp Developments  Casio Computer

Poor diversification

The 3 months correlation between NioCorp and Casio is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Casio Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer and NioCorp Developments 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 NioCorp Developments Ltd 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 has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Casio Computer go up and down completely randomly.

Pair Corralation between NioCorp Developments and Casio Computer

Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the Casio Computer. In addition to that, NioCorp Developments is 1.67 times more volatile than Casio Computer Co. It trades about -0.07 of its total potential returns per unit of risk. Casio Computer Co is currently generating about -0.04 per unit of volatility. If you would invest  7,751  in Casio Computer Co on September 2, 2024 and sell it today you would lose (706.00) from holding Casio Computer Co or give up 9.11% of portfolio value over 90 days.

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

NioCorp Developments Ltd  vs.  Casio Computer Co

NioCorp Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NioCorp Developments Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with NioCorp Developments and Casio Computer

The main advantage of trading using opposite NioCorp Developments and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments 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 NioCorp Developments Ltd and Casio Computer Co 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.