Correlation Between SMC Corp and Yaskawa Electric
Can any of the company-specific risk be diversified away by investing in both SMC Corp and Yaskawa Electric 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 SMC Corp and Yaskawa Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMC Corp and Yaskawa Electric Corp, you can compare the effects of market volatilities on SMC Corp and Yaskawa Electric 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 SMC Corp with a short position of Yaskawa Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMC Corp and Yaskawa Electric.
Diversification Opportunities for SMC Corp and Yaskawa Electric
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SMC and Yaskawa is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding SMC Corp and Yaskawa Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yaskawa Electric Corp and SMC Corp 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 SMC Corp are associated (or correlated) with Yaskawa Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yaskawa Electric Corp has no effect on the direction of SMC Corp i.e., SMC Corp and Yaskawa Electric go up and down completely randomly.
Pair Corralation between SMC Corp and Yaskawa Electric
Assuming the 90 days horizon SMC Corp is expected to generate 0.99 times more return on investment than Yaskawa Electric. However, SMC Corp is 1.01 times less risky than Yaskawa Electric. It trades about 0.08 of its potential returns per unit of risk. Yaskawa Electric Corp is currently generating about -0.17 per unit of risk. If you would invest 42,026 in SMC Corp on August 28, 2024 and sell it today you would earn a total of 1,082 from holding SMC Corp or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMC Corp vs. Yaskawa Electric Corp
Performance |
| Timeline |
| SMC Corp |
| Yaskawa Electric Corp |
SMC Corp and Yaskawa Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMC Corp and Yaskawa Electric
The main advantage of trading using opposite SMC Corp and Yaskawa Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMC Corp position performs unexpectedly, Yaskawa Electric 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 Yaskawa Electric will offset losses from the drop in Yaskawa Electric's long position.The idea behind SMC Corp and Yaskawa Electric Corp 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.| Yaskawa Electric vs. FREYR Battery SA | Yaskawa Electric vs. nVent Electric PLC | Yaskawa Electric vs. Hubbell | Yaskawa Electric vs. Advanced Energy Industries |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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