Correlation Between YASKAWA ELEC and Alfen NV

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

By analyzing existing cross correlation between YASKAWA ELEC UNSP and Alfen NV, you can compare the effects of market volatilities on YASKAWA ELEC and Alfen NV 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 YASKAWA ELEC with a short position of Alfen NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of YASKAWA ELEC and Alfen NV.

Diversification Opportunities for YASKAWA ELEC and Alfen NV

0.57

Correlation Coefficient

YASKAWA ELEC  Alfen NV

Very weak diversification

The 3 months correlation between YASKAWA and Alfen is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding YASKAWA ELEC UNSP and Alfen NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfen NV and YASKAWA ELEC 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 YASKAWA ELEC UNSP are associated (or correlated) with Alfen NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfen NV has no effect on the direction of YASKAWA ELEC i.e., YASKAWA ELEC and Alfen NV go up and down completely randomly.

Pair Corralation between YASKAWA ELEC and Alfen NV

Assuming the 90 days trading horizon YASKAWA ELEC is expected to generate 1.22 times less return on investment than Alfen NV. But when comparing it to its historical volatility, YASKAWA ELEC UNSP is 1.57 times less risky than Alfen NV. It trades about 0.08 of its potential returns per unit of risk. Alfen NV is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,163  in Alfen NV on November 29, 2024 and sell it today you would earn a total of  129.00  from holding Alfen NV or generate 11.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

YASKAWA ELEC UNSP  vs.  Alfen NV

YASKAWA ELEC UNSP

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in YASKAWA ELEC UNSP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, YASKAWA ELEC reported solid returns over the last few months and may actually be approaching a breakup point.

Alfen NV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alfen NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alfen NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YASKAWA ELEC and Alfen NV

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

The idea behind YASKAWA ELEC UNSP and Alfen NV 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.