Correlation Between Casio Computer and Sharp Corp

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

Diversification Opportunities for Casio Computer and Sharp Corp

0.81

Correlation Coefficient

Casio Computer  Sharp Corp

Very poor diversification

The 3 months correlation between Casio and Sharp is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer Co and Sharp Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharp Corp ADR 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 Sharp Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharp Corp ADR has no effect on the direction of Casio Computer i.e., Casio Computer and Sharp Corp go up and down completely randomly.

Pair Corralation between Casio Computer and Sharp Corp

Assuming the 90 days horizon Casio Computer Co is expected to generate 0.75 times more return on investment than Sharp Corp. However, Casio Computer Co is 1.34 times less risky than Sharp Corp. It trades about 0.03 of its potential returns per unit of risk. Sharp Corp ADR is currently generating about -0.01 per unit of risk. If you would invest  6,958  in Casio Computer Co on February 12, 2025 and sell it today you would earn a total of  447.00  from holding Casio Computer Co or generate 6.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.18%
Values	Daily Returns

Casio Computer Co  vs.  Sharp Corp ADR

Casio Computer

Risk-Adjusted Performance

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 conflicting 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.

Sharp Corp ADR

Risk-Adjusted Performance

Weak

Over the last 90 days Sharp Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile 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 Casio Computer and Sharp Corp

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

The idea behind Casio Computer Co and Sharp Corp ADR 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.