Correlation Between Apple and Yamaha Corp

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

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

Diversification Opportunities for Apple and Yamaha Corp

-0.52

Correlation Coefficient

Apple  Yamaha Corp

Excellent diversification

The 3 months correlation between Apple and Yamaha is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Yamaha Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha Corp and Apple 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 Apple Inc are associated (or correlated) with Yamaha Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamaha Corp has no effect on the direction of Apple i.e., Apple and Yamaha Corp go up and down completely randomly.

Pair Corralation between Apple and Yamaha Corp

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.53 times more return on investment than Yamaha Corp. However, Apple Inc is 1.89 times less risky than Yamaha Corp. It trades about 0.5 of its potential returns per unit of risk. Yamaha Corp is currently generating about -0.09 per unit of risk. If you would invest  22,810  in Apple Inc on October 1, 2024 and sell it today you would earn a total of  1,685  from holding Apple Inc or generate 7.39% return on investment over 90 days.

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

Apple Inc  vs.  Yamaha Corp

Apple Inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

Yamaha Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yamaha Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Apple and Yamaha Corp

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

The idea behind Apple Inc and Yamaha Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.