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 P, 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

-0.4

Correlation Coefficient

Apple  YAMAHA CORP

Very good diversification

The 3 months correlation between Apple and YAMAHA is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and YAMAHA P 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 0.66 times more return on investment than YAMAHA CORP. However, Apple Inc is 1.51 times less risky than YAMAHA CORP. It trades about 0.05 of its potential returns per unit of risk. YAMAHA P is currently generating about -0.06 per unit of risk. If you would invest  16,762  in Apple Inc on October 24, 2024 and sell it today you would earn a total of  4,733  from holding Apple Inc or generate 28.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.76%
Values	Daily Returns

Apple Inc  vs.  YAMAHA P

Apple Inc

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Apple is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

YAMAHA CORP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YAMAHA P has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 P 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.