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

-0.04

Correlation Coefficient

Yokohama Rubber  Apple

Good diversification

The 3 months correlation between Yokohama and Apple is -0.04. 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 under-perform the Apple. In addition to that, Yokohama Rubber is 1.35 times more volatile than Apple Inc. It trades about 0.0 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.23 per unit of volatility. If you would invest  20,476  in Apple Inc on September 20, 2024 and sell it today you would earn a total of  3,524  from holding Apple Inc or generate 17.21% return on investment over 90 days.

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

The Yokohama Rubber  vs.  Apple Inc

Yokohama Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Yokohama Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Yokohama Rubber is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Apple Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.