Correlation Between SIERRA METALS and Yamaha
Can any of the company-specific risk be diversified away by investing in both SIERRA METALS and Yamaha 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 SIERRA METALS and Yamaha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIERRA METALS and Yamaha, you can compare the effects of market volatilities on SIERRA METALS and Yamaha 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 SIERRA METALS with a short position of Yamaha. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIERRA METALS and Yamaha.
Diversification Opportunities for SIERRA METALS and Yamaha
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SIERRA and Yamaha is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding SIERRA METALS and Yamaha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha and SIERRA METALS 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 SIERRA METALS are associated (or correlated) with Yamaha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamaha has no effect on the direction of SIERRA METALS i.e., SIERRA METALS and Yamaha go up and down completely randomly.
Pair Corralation between SIERRA METALS and Yamaha
Assuming the 90 days trading horizon SIERRA METALS is expected to generate 1.49 times more return on investment than Yamaha. However, SIERRA METALS is 1.49 times more volatile than Yamaha. It trades about 0.31 of its potential returns per unit of risk. Yamaha is currently generating about -0.02 per unit of risk. If you would invest 43.00 in SIERRA METALS on October 28, 2024 and sell it today you would earn a total of 15.00 from holding SIERRA METALS or generate 34.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIERRA METALS vs. Yamaha
Performance |
| Timeline |
| SIERRA METALS |
| Yamaha |
SIERRA METALS and Yamaha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIERRA METALS and Yamaha
The main advantage of trading using opposite SIERRA METALS and Yamaha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIERRA METALS position performs unexpectedly, Yamaha 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 Yamaha will offset losses from the drop in Yamaha's long position.| SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Apple Inc |
| Yamaha vs. Booking Holdings | Yamaha vs. Oriental Land Co | Yamaha vs. ANTA Sports Products | Yamaha vs. Li Ning Company |
Check out your portfolio center.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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