Correlation Between Daifuku Co and Yokogawa Electric

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

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

Diversification Opportunities for Daifuku Co and Yokogawa Electric

0.31

Correlation Coefficient

Daifuku Co  Yokogawa Electric

Weak diversification

The 3 months correlation between Daifuku and Yokogawa is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Daifuku Co and Yokogawa Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokogawa Electric and Daifuku Co 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 Daifuku Co are associated (or correlated) with Yokogawa Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokogawa Electric has no effect on the direction of Daifuku Co i.e., Daifuku Co and Yokogawa Electric go up and down completely randomly.

Pair Corralation between Daifuku Co and Yokogawa Electric

If you would invest  936.00  in Daifuku Co on August 31, 2024 and sell it today you would earn a total of  105.00  from holding Daifuku Co or generate 11.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Daifuku Co  vs.  Yokogawa Electric

Daifuku Co

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daifuku Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Daifuku Co may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Yokogawa Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yokogawa Electric has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Yokogawa Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Daifuku Co and Yokogawa Electric

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

The idea behind Daifuku Co and Yokogawa Electric 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.