Correlation Between Subaru Corp and Suzuki

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

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

Diversification Opportunities for Subaru Corp and Suzuki

0.44

Correlation Coefficient

Subaru Corp  Suzuki

Very weak diversification

The 3 months correlation between Subaru and Suzuki is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Subaru Corp ADR and Suzuki Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzuki Motor Corp and Subaru Corp 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 Subaru Corp ADR are associated (or correlated) with Suzuki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzuki Motor Corp has no effect on the direction of Subaru Corp i.e., Subaru Corp and Suzuki go up and down completely randomly.

Pair Corralation between Subaru Corp and Suzuki

Assuming the 90 days horizon Subaru Corp is expected to generate 4.67 times less return on investment than Suzuki. In addition to that, Subaru Corp is 1.11 times more volatile than Suzuki Motor Corp. It trades about 0.02 of its total potential returns per unit of risk. Suzuki Motor Corp is currently generating about 0.08 per unit of volatility. If you would invest  4,524  in Suzuki Motor Corp on December 29, 2024 and sell it today you would earn a total of  411.00  from holding Suzuki Motor Corp or generate 9.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Subaru Corp ADR  vs.  Suzuki Motor Corp

Subaru Corp ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Subaru Corp ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Subaru Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Suzuki Motor Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Suzuki Motor Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Suzuki may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Subaru Corp and Suzuki

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

The idea behind Subaru Corp ADR and Suzuki Motor 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.