Correlation Between Yokohama Rubber and Ring Energy

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

Diversification Opportunities for Yokohama Rubber and Ring Energy

-0.38

Correlation Coefficient

Yokohama Rubber  Ring Energy

Very good diversification

The 3 months correlation between Yokohama and Ring is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and Ring Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ring Energy 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 Ring Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ring Energy has no effect on the direction of Yokohama Rubber i.e., Yokohama Rubber and Ring Energy go up and down completely randomly.

Pair Corralation between Yokohama Rubber and Ring Energy

Assuming the 90 days trading horizon Yokohama Rubber is expected to generate 23.33 times less return on investment than Ring Energy. But when comparing it to its historical volatility, The Yokohama Rubber is 1.92 times less risky than Ring Energy. It trades about 0.03 of its potential returns per unit of risk. Ring Energy is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  120.00  in Ring Energy on October 20, 2024 and sell it today you would earn a total of  20.00  from holding Ring Energy or generate 16.67% 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.  Ring Energy

Yokohama Rubber

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Yokohama Rubber are ranked lower than 1 (%) 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ring Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ring Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ring Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Yokohama Rubber and Ring Energy

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

The idea behind The Yokohama Rubber and Ring Energy 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.