Correlation Between Yokohama Rubber and Aegean Airlines

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

By analyzing existing cross correlation between The Yokohama Rubber and Aegean Airlines SA, you can compare the effects of market volatilities on Yokohama Rubber and Aegean Airlines 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 Yokohama Rubber with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokohama Rubber and Aegean Airlines.

Diversification Opportunities for Yokohama Rubber and Aegean Airlines

0.55

Correlation Coefficient

Yokohama Rubber  Aegean Airlines

Very weak diversification

The 3 months correlation between Yokohama and Aegean is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA and Yokohama Rubber 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 The Yokohama Rubber are associated (or correlated) with Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of Yokohama Rubber i.e., Yokohama Rubber and Aegean Airlines go up and down completely randomly.

Pair Corralation between Yokohama Rubber and Aegean Airlines

Assuming the 90 days trading horizon The Yokohama Rubber is expected to generate 0.85 times more return on investment than Aegean Airlines. However, The Yokohama Rubber is 1.17 times less risky than Aegean Airlines. It trades about 0.1 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about 0.07 per unit of risk. If you would invest  1,860  in The Yokohama Rubber on October 26, 2024 and sell it today you would earn a total of  160.00  from holding The Yokohama Rubber or generate 8.6% return on investment over 90 days.

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

The Yokohama Rubber  vs.  Aegean Airlines SA

Yokohama Rubber

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Yokohama Rubber are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, Yokohama Rubber may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aegean Airlines SA

Risk-Adjusted Performance

5 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aegean Airlines SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aegean Airlines may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Yokohama Rubber and Aegean Airlines

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

The idea behind The Yokohama Rubber and Aegean Airlines SA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.