Correlation Between Yokohama Rubber and DBS Group

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

Diversification Opportunities for Yokohama Rubber and DBS Group

0.68

Correlation Coefficient

Yokohama Rubber  DBS Group

Poor diversification

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

Pair Corralation between Yokohama Rubber and DBS Group

If you would invest  1,460  in The Yokohama Rubber on October 26, 2024 and sell it today you would earn a total of  560.00  from holding The Yokohama Rubber or generate 38.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.0%
Values	Daily Returns

The Yokohama Rubber  vs.  DBS Group Holdings

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.

DBS Group Holdings

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days DBS Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, DBS Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yokohama Rubber and DBS Group

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

The idea behind The Yokohama Rubber and DBS Group Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.