Correlation Between Capcom Co and Aristocrat Leisure

Can any of the company-specific risk be diversified away by investing in both Capcom Co and Aristocrat Leisure 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 Capcom Co and Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Capcom Co and Aristocrat Leisure

-0.14

Correlation Coefficient

Capcom Co  Aristocrat Leisure

Good diversification

The 3 months correlation between Capcom and Aristocrat is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Capcom Co Ltd and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure and Capcom Co 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 Capcom Co Ltd are associated (or correlated) with Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of Capcom Co i.e., Capcom Co and Aristocrat Leisure go up and down completely randomly.

Pair Corralation between Capcom Co and Aristocrat Leisure

Assuming the 90 days horizon Capcom Co Ltd is expected to under-perform the Aristocrat Leisure. But the pink sheet apears to be less risky and, when comparing its historical volatility, Capcom Co Ltd is 1.12 times less risky than Aristocrat Leisure. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Aristocrat Leisure Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,219  in Aristocrat Leisure Limited on May 4, 2025 and sell it today you would earn a total of  395.00  from holding Aristocrat Leisure Limited or generate 9.36% return on investment over 90 days.

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

Capcom Co Ltd  vs.  Aristocrat Leisure Limited

Capcom Co

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capcom Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Aristocrat Leisure

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aristocrat Leisure Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aristocrat Leisure may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Capcom Co and Aristocrat Leisure

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

The idea behind Capcom Co Ltd and Aristocrat Leisure Limited 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.