Correlation Between Oriental Land and Yamaha Corp

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

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

Diversification Opportunities for Oriental Land and Yamaha Corp

0.02

Correlation Coefficient

Oriental Land  Yamaha Corp

Significant diversification

The 3 months correlation between Oriental and Yamaha is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Land Co and Yamaha Corp DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha Corp DRC and Oriental Land 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 Oriental Land Co 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 DRC has no effect on the direction of Oriental Land i.e., Oriental Land and Yamaha Corp go up and down completely randomly.

Pair Corralation between Oriental Land and Yamaha Corp

Assuming the 90 days horizon Oriental Land Co is expected to under-perform the Yamaha Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Oriental Land Co is 1.43 times less risky than Yamaha Corp. The pink sheet trades about -0.35 of its potential returns per unit of risk. The Yamaha Corp DRC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  693.00  in Yamaha Corp DRC on December 4, 2024 and sell it today you would earn a total of  29.00  from holding Yamaha Corp DRC or generate 4.18% return on investment over 90 days.

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

Oriental Land Co  vs.  Yamaha Corp DRC

Oriental Land

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oriental Land Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Yamaha Corp DRC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Oriental Land and Yamaha Corp

The main advantage of trading using opposite Oriental Land and Yamaha Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Land 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 Oriental Land Co and Yamaha Corp DRC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.