Correlation Between VERTIV HOLCL and YASKAWA ELEC

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

By analyzing existing cross correlation between VERTIV HOLCL A and YASKAWA ELEC UNSP, you can compare the effects of market volatilities on VERTIV HOLCL and YASKAWA ELEC 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 VERTIV HOLCL with a short position of YASKAWA ELEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of VERTIV HOLCL and YASKAWA ELEC.

Diversification Opportunities for VERTIV HOLCL and YASKAWA ELEC

-0.67

Correlation Coefficient

VERTIV HOLCL  YASKAWA ELEC

Excellent diversification

The 3 months correlation between VERTIV and YASKAWA is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding VERTIV HOLCL A and YASKAWA ELEC UNSP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YASKAWA ELEC UNSP and VERTIV HOLCL 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 VERTIV HOLCL A are associated (or correlated) with YASKAWA ELEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YASKAWA ELEC UNSP has no effect on the direction of VERTIV HOLCL i.e., VERTIV HOLCL and YASKAWA ELEC go up and down completely randomly.

Pair Corralation between VERTIV HOLCL and YASKAWA ELEC

Assuming the 90 days horizon VERTIV HOLCL A is expected to generate 2.5 times more return on investment than YASKAWA ELEC. However, VERTIV HOLCL is 2.5 times more volatile than YASKAWA ELEC UNSP. It trades about 0.0 of its potential returns per unit of risk. YASKAWA ELEC UNSP is currently generating about -0.1 per unit of risk. If you would invest  11,866  in VERTIV HOLCL A on September 12, 2024 and sell it today you would lose (234.00) from holding VERTIV HOLCL A or give up 1.97% of portfolio value over 90 days.

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

VERTIV HOLCL A  vs.  YASKAWA ELEC UNSP

VERTIV HOLCL A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VERTIV HOLCL A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VERTIV HOLCL reported solid returns over the last few months and may actually be approaching a breakup point.

YASKAWA ELEC UNSP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YASKAWA ELEC UNSP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with VERTIV HOLCL and YASKAWA ELEC

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

The idea behind VERTIV HOLCL A and YASKAWA ELEC UNSP 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.