Correlation Between Materialise and Yokohama Rubber

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

By analyzing existing cross correlation between Materialise NV and The Yokohama Rubber, you can compare the effects of market volatilities on Materialise and Yokohama Rubber 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 Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and Yokohama Rubber.

Diversification Opportunities for Materialise and Yokohama Rubber

-0.1

Correlation Coefficient

Materialise  Yokohama Rubber

Good diversification

The 3 months correlation between Materialise and Yokohama is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber 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 Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of Materialise i.e., Materialise and Yokohama Rubber go up and down completely randomly.

Pair Corralation between Materialise and Yokohama Rubber

Assuming the 90 days trading horizon Materialise NV is expected to under-perform the Yokohama Rubber. In addition to that, Materialise is 3.49 times more volatile than The Yokohama Rubber. It trades about -0.08 of its total potential returns per unit of risk. The Yokohama Rubber is currently generating about 0.09 per unit of volatility. If you would invest  2,040  in The Yokohama Rubber on December 26, 2024 and sell it today you would earn a total of  160.00  from holding The Yokohama Rubber or generate 7.84% return on investment over 90 days.

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

Materialise NV  vs.  The Yokohama Rubber

Materialise NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Materialise NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Yokohama Rubber

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Yokohama Rubber are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, Yokohama Rubber may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Materialise and Yokohama Rubber

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

The idea behind Materialise NV and The Yokohama Rubber 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.