Correlation Between Yokohama Rubber and AMADEUS IT

Can any of the company-specific risk be diversified away by investing in both Yokohama Rubber and AMADEUS IT 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 AMADEUS IT 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 AMADEUS IT GRP, you can compare the effects of market volatilities on Yokohama Rubber and AMADEUS IT 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 AMADEUS IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokohama Rubber and AMADEUS IT.

Diversification Opportunities for Yokohama Rubber and AMADEUS IT

0.68

Correlation Coefficient

Yokohama Rubber  AMADEUS IT

Poor diversification

The 3 months correlation between Yokohama and AMADEUS is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and AMADEUS IT GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMADEUS IT GRP 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 AMADEUS IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMADEUS IT GRP has no effect on the direction of Yokohama Rubber i.e., Yokohama Rubber and AMADEUS IT go up and down completely randomly.

Pair Corralation between Yokohama Rubber and AMADEUS IT

Assuming the 90 days trading horizon The Yokohama Rubber is expected to generate 0.92 times more return on investment than AMADEUS IT. However, The Yokohama Rubber is 1.09 times less risky than AMADEUS IT. It trades about 0.13 of its potential returns per unit of risk. AMADEUS IT GRP is currently generating about 0.1 per unit of risk. If you would invest  1,948  in The Yokohama Rubber on December 23, 2024 and sell it today you would earn a total of  252.00  from holding The Yokohama Rubber or generate 12.94% return on investment over 90 days.

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

The Yokohama Rubber  vs.  AMADEUS IT GRP

Yokohama Rubber

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Yokohama Rubber are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Yokohama Rubber exhibited solid returns over the last few months and may actually be approaching a breakup point.

AMADEUS IT GRP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AMADEUS IT GRP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AMADEUS IT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Yokohama Rubber and AMADEUS IT

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

The idea behind The Yokohama Rubber and AMADEUS IT GRP 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.