Correlation Between Shimano and Yamaha Corp

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

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

Diversification Opportunities for Shimano and Yamaha Corp

0.4

Correlation Coefficient

Shimano  Yamaha Corp

Very weak diversification

The 3 months correlation between Shimano and Yamaha is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Shimano 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 Shimano 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 Shimano 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 Shimano i.e., Shimano and Yamaha Corp go up and down completely randomly.

Pair Corralation between Shimano and Yamaha Corp

Assuming the 90 days horizon Shimano is expected to generate 0.9 times more return on investment than Yamaha Corp. However, Shimano is 1.11 times less risky than Yamaha Corp. It trades about 0.0 of its potential returns per unit of risk. Yamaha Corp DRC is currently generating about -0.02 per unit of risk. If you would invest  13,637  in Shimano on December 3, 2024 and sell it today you would lose (142.00) from holding Shimano or give up 1.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	73.33%
Values	Daily Returns

Shimano  vs.  Yamaha Corp DRC

Shimano

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shimano has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Shimano is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Shimano and Yamaha Corp

The main advantage of trading using opposite Shimano and Yamaha Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shimano 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 Shimano 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.