Correlation Between Sixt Leasing and Yokohama Rubber

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

By analyzing existing cross correlation between Sixt Leasing SE and The Yokohama Rubber, you can compare the effects of market volatilities on Sixt Leasing and Yokohama Rubber 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 Sixt Leasing with a short position of Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sixt Leasing and Yokohama Rubber.

Diversification Opportunities for Sixt Leasing and Yokohama Rubber

-0.15

Correlation Coefficient

Sixt Leasing  Yokohama Rubber

Good diversification

The 3 months correlation between Sixt and Yokohama is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sixt Leasing SE and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber and Sixt Leasing 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 Sixt Leasing SE are associated (or correlated) with Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of Sixt Leasing i.e., Sixt Leasing and Yokohama Rubber go up and down completely randomly.

Pair Corralation between Sixt Leasing and Yokohama Rubber

Assuming the 90 days trading horizon Sixt Leasing is expected to generate 12.43 times less return on investment than Yokohama Rubber. In addition to that, Sixt Leasing is 1.57 times more volatile than The Yokohama Rubber. It trades about 0.01 of its total potential returns per unit of risk. The Yokohama Rubber is currently generating about 0.13 per unit of volatility. If you would invest  1,948  in The Yokohama Rubber on December 23, 2024 and sell it today you would earn a total of  252.00  from holding The Yokohama Rubber or generate 12.94% return on investment over 90 days.

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

Sixt Leasing SE  vs.  The Yokohama Rubber

Sixt Leasing SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sixt Leasing SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sixt Leasing is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Yokohama Rubber

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Yokohama Rubber are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Yokohama Rubber exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sixt Leasing and Yokohama Rubber

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

The idea behind Sixt Leasing SE and The Yokohama Rubber 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.