Correlation Between Materialise and YAMAHA MOTOR

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

By analyzing existing cross correlation between Materialise NV and YAMAHA MOTOR, you can compare the effects of market volatilities on Materialise and YAMAHA MOTOR 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 Materialise with a short position of YAMAHA MOTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and YAMAHA MOTOR.

Diversification Opportunities for Materialise and YAMAHA MOTOR

0.32

Correlation Coefficient

Materialise  YAMAHA MOTOR

Weak diversification

The 3 months correlation between Materialise and YAMAHA is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and YAMAHA MOTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YAMAHA MOTOR and Materialise 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 Materialise NV are associated (or correlated) with YAMAHA MOTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YAMAHA MOTOR has no effect on the direction of Materialise i.e., Materialise and YAMAHA MOTOR go up and down completely randomly.

Pair Corralation between Materialise and YAMAHA MOTOR

Assuming the 90 days trading horizon Materialise NV is expected to generate 3.19 times more return on investment than YAMAHA MOTOR. However, Materialise is 3.19 times more volatile than YAMAHA MOTOR. It trades about 0.15 of its potential returns per unit of risk. YAMAHA MOTOR is currently generating about 0.0 per unit of risk. If you would invest  545.00  in Materialise NV on October 25, 2024 and sell it today you would earn a total of  205.00  from holding Materialise NV or generate 37.61% return on investment over 90 days.

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

Materialise NV  vs.  YAMAHA MOTOR

Materialise NV

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

YAMAHA MOTOR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YAMAHA MOTOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, YAMAHA MOTOR is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Materialise and YAMAHA MOTOR

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

The idea behind Materialise NV and YAMAHA MOTOR 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.