Correlation Between Fanuc and Yaskawa Electric

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

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

Diversification Opportunities for Fanuc and Yaskawa Electric

0.79

Correlation Coefficient

Fanuc  Yaskawa Electric

Poor diversification

The 3 months correlation between Fanuc and Yaskawa is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fanuc and Yaskawa Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yaskawa Electric Corp and Fanuc 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 Fanuc are associated (or correlated) with Yaskawa Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yaskawa Electric Corp has no effect on the direction of Fanuc i.e., Fanuc and Yaskawa Electric go up and down completely randomly.

Pair Corralation between Fanuc and Yaskawa Electric

Assuming the 90 days horizon Fanuc is expected to generate 0.72 times more return on investment than Yaskawa Electric. However, Fanuc is 1.39 times less risky than Yaskawa Electric. It trades about 0.0 of its potential returns per unit of risk. Yaskawa Electric Corp is currently generating about -0.11 per unit of risk. If you would invest  1,313  in Fanuc on September 16, 2024 and sell it today you would lose (2.00) from holding Fanuc or give up 0.15% of portfolio value over 90 days.

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

Fanuc  vs.  Yaskawa Electric Corp

Fanuc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fanuc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Fanuc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Yaskawa Electric Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yaskawa Electric Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Fanuc and Yaskawa Electric

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

The idea behind Fanuc and Yaskawa Electric 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.