Correlation Between Gaztransport Technigaz and Yokohama Rubber

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

By analyzing existing cross correlation between Gaztransport Technigaz SA and The Yokohama Rubber, you can compare the effects of market volatilities on Gaztransport Technigaz 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 Gaztransport Technigaz with a short position of Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport Technigaz and Yokohama Rubber.

Diversification Opportunities for Gaztransport Technigaz and Yokohama Rubber

-0.35

Correlation Coefficient

Gaztransport Technigaz  Yokohama Rubber

Very good diversification

The 3 months correlation between Gaztransport and Yokohama is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz SA and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber and Gaztransport Technigaz 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 Gaztransport Technigaz SA 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 Gaztransport Technigaz i.e., Gaztransport Technigaz and Yokohama Rubber go up and down completely randomly.

Pair Corralation between Gaztransport Technigaz and Yokohama Rubber

Assuming the 90 days horizon Gaztransport Technigaz SA is expected to generate 1.58 times more return on investment than Yokohama Rubber. However, Gaztransport Technigaz is 1.58 times more volatile than The Yokohama Rubber. It trades about 0.22 of its potential returns per unit of risk. The Yokohama Rubber is currently generating about 0.24 per unit of risk. If you would invest  12,950  in Gaztransport Technigaz SA on October 11, 2024 and sell it today you would earn a total of  1,060  from holding Gaztransport Technigaz SA or generate 8.19% return on investment over 90 days.

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

Gaztransport Technigaz SA  vs.  The Yokohama Rubber

Gaztransport Technigaz

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gaztransport Technigaz may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Yokohama Rubber

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Yokohama Rubber are ranked lower than 5 (%) 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 February 2025.

Pair Trading with Gaztransport Technigaz and Yokohama Rubber

The main advantage of trading using opposite Gaztransport Technigaz and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaztransport Technigaz 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 Gaztransport Technigaz SA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.