Correlation Between Schneider Electric and Yokogawa Electric

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

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

Diversification Opportunities for Schneider Electric and Yokogawa Electric

0.36

Correlation Coefficient

Schneider Electric  Yokogawa Electric

Weak diversification

The 3 months correlation between Schneider and Yokogawa is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SA and Yokogawa Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokogawa Electric Corp and Schneider Electric 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 Schneider Electric SA are associated (or correlated) with Yokogawa Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokogawa Electric Corp has no effect on the direction of Schneider Electric i.e., Schneider Electric and Yokogawa Electric go up and down completely randomly.

Pair Corralation between Schneider Electric and Yokogawa Electric

Assuming the 90 days horizon Schneider Electric SA is expected to generate 0.86 times more return on investment than Yokogawa Electric. However, Schneider Electric SA is 1.16 times less risky than Yokogawa Electric. It trades about -0.03 of its potential returns per unit of risk. Yokogawa Electric Corp is currently generating about -0.13 per unit of risk. If you would invest  5,093  in Schneider Electric SA on December 2, 2024 and sell it today you would lose (256.00) from holding Schneider Electric SA or give up 5.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Schneider Electric SA  vs.  Yokogawa Electric Corp

Schneider Electric

Risk-Adjusted Performance

Very Weak

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

Yokogawa Electric Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yokogawa 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Schneider Electric and Yokogawa Electric

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

The idea behind Schneider Electric SA and Yokogawa 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.