Correlation Between Porsche Automobil and Mazda

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

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

Diversification Opportunities for Porsche Automobil and Mazda

0.52

Correlation Coefficient

Porsche Automobil  Mazda

Very weak diversification

The 3 months correlation between Porsche and Mazda is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Porsche Automobil Holding and Mazda Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mazda Motor Corp and Porsche Automobil 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 Porsche Automobil Holding are associated (or correlated) with Mazda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mazda Motor Corp has no effect on the direction of Porsche Automobil i.e., Porsche Automobil and Mazda go up and down completely randomly.

Pair Corralation between Porsche Automobil and Mazda

Assuming the 90 days horizon Porsche Automobil is expected to generate 1.79 times less return on investment than Mazda. In addition to that, Porsche Automobil is 1.3 times more volatile than Mazda Motor Corp. It trades about 0.06 of its total potential returns per unit of risk. Mazda Motor Corp is currently generating about 0.14 per unit of volatility. If you would invest  311.00  in Mazda Motor Corp on December 20, 2024 and sell it today you would earn a total of  49.00  from holding Mazda Motor Corp or generate 15.76% return on investment over 90 days.

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

Porsche Automobil Holding  vs.  Mazda Motor Corp

Porsche Automobil Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Porsche Automobil Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Porsche Automobil may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mazda Motor Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mazda Motor Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Mazda showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Porsche Automobil and Mazda

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

The idea behind Porsche Automobil Holding and Mazda 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.