Correlation Between Neoen SA and Yokohama Rubber
Can any of the company-specific risk be diversified away by investing in both Neoen SA and Yokohama Rubber 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 Neoen SA and Yokohama Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neoen SA and The Yokohama Rubber, you can compare the effects of market volatilities on Neoen SA and Yokohama Rubber 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 Neoen SA with a short position of Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neoen SA and Yokohama Rubber.
Diversification Opportunities for Neoen SA and Yokohama Rubber
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Neoen and Yokohama is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Neoen SA and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber and Neoen SA 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 Neoen SA are associated (or correlated) with Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of Neoen SA i.e., Neoen SA and Yokohama Rubber go up and down completely randomly.
Pair Corralation between Neoen SA and Yokohama Rubber
Assuming the 90 days horizon Neoen SA is expected to generate 0.91 times more return on investment than Yokohama Rubber. However, Neoen SA is 1.1 times less risky than Yokohama Rubber. It trades about 0.08 of its potential returns per unit of risk. The Yokohama Rubber is currently generating about 0.02 per unit of risk. If you would invest 2,660 in Neoen SA on September 14, 2024 and sell it today you would earn a total of 1,282 from holding Neoen SA or generate 48.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neoen SA vs. The Yokohama Rubber
Performance |
| Timeline |
| Neoen SA |
| Yokohama Rubber |
Neoen SA and Yokohama Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neoen SA and Yokohama Rubber
The main advantage of trading using opposite Neoen SA and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neoen SA position performs unexpectedly, Yokohama Rubber 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 Yokohama Rubber will offset losses from the drop in Yokohama Rubber's long position.| Neoen SA vs. The Yokohama Rubber | Neoen SA vs. UNITED RENTALS | Neoen SA vs. Mitsubishi Materials | Neoen SA vs. National Storage Affiliates |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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