Correlation Between Tokyu Construction and Yamaha

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

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

Diversification Opportunities for Tokyu Construction and Yamaha

-0.34

Correlation Coefficient

Tokyu Construction  Yamaha

Very good diversification

The 3 months correlation between Tokyu and Yamaha is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Tokyu Construction Co and Yamaha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha and Tokyu Construction 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 Tokyu Construction Co are associated (or correlated) with Yamaha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamaha has no effect on the direction of Tokyu Construction i.e., Tokyu Construction and Yamaha go up and down completely randomly.

Pair Corralation between Tokyu Construction and Yamaha

Assuming the 90 days horizon Tokyu Construction Co is expected to generate 0.35 times more return on investment than Yamaha. However, Tokyu Construction Co is 2.87 times less risky than Yamaha. It trades about 0.14 of its potential returns per unit of risk. Yamaha is currently generating about -0.08 per unit of risk. If you would invest  400.00  in Tokyu Construction Co on October 27, 2024 and sell it today you would earn a total of  30.00  from holding Tokyu Construction Co or generate 7.5% return on investment over 90 days.

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

Tokyu Construction Co  vs.  Yamaha

Tokyu Construction

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tokyu Construction Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tokyu Construction may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Yamaha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yamaha has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Tokyu Construction and Yamaha

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

The idea behind Tokyu Construction Co and Yamaha 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.