Correlation Between Yokohama Rubber and Apple

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

Diversification Opportunities for Yokohama Rubber and Apple

0.76

Correlation Coefficient

Yokohama Rubber  Apple

Poor diversification

The 3 months correlation between Yokohama and Apple is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Yokohama Rubber i.e., Yokohama Rubber and Apple go up and down completely randomly.

Pair Corralation between Yokohama Rubber and Apple

Assuming the 90 days trading horizon The Yokohama Rubber is expected to generate 1.05 times more return on investment than Apple. However, Yokohama Rubber is 1.05 times more volatile than Apple Inc. It trades about -0.04 of its potential returns per unit of risk. Apple Inc is currently generating about -0.45 per unit of risk. If you would invest  1,980  in The Yokohama Rubber on October 22, 2024 and sell it today you would lose (20.00) from holding The Yokohama Rubber or give up 1.01% of portfolio value over 90 days.

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

The Yokohama Rubber  vs.  Apple Inc

Yokohama Rubber

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Yokohama Rubber are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Yokohama Rubber is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Apple Inc

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Apple is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Yokohama Rubber and Apple

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

The idea behind The Yokohama Rubber and Apple Inc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.