Correlation Between Suzuki and Yamaha
Can any of the company-specific risk be diversified away by investing in both Suzuki 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 Suzuki and Yamaha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suzuki Motor Corp and Yamaha Motor Co, you can compare the effects of market volatilities on Suzuki 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 Suzuki with a short position of Yamaha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzuki and Yamaha.
Diversification Opportunities for Suzuki and Yamaha
Significant diversification
The 3 months correlation between Suzuki and Yamaha is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Suzuki Motor Corp and Yamaha Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha Motor and Suzuki 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 Suzuki Motor Corp 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 Motor has no effect on the direction of Suzuki i.e., Suzuki and Yamaha go up and down completely randomly.
Pair Corralation between Suzuki and Yamaha
Assuming the 90 days horizon Suzuki is expected to generate 93.42 times less return on investment than Yamaha. But when comparing it to its historical volatility, Suzuki Motor Corp is 30.91 times less risky than Yamaha. It trades about 0.05 of its potential returns per unit of risk. Yamaha Motor Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 611.00 in Yamaha Motor Co on September 12, 2024 and sell it today you would earn a total of 274.00 from holding Yamaha Motor Co or generate 44.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 87.25% |
| Values | Daily Returns |
Suzuki Motor Corp vs. Yamaha Motor Co
Performance |
| Timeline |
| Suzuki Motor Corp |
| Yamaha Motor |
Suzuki and Yamaha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suzuki and Yamaha
The main advantage of trading using opposite Suzuki and Yamaha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suzuki 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.| Suzuki vs. Isuzu Motors | Suzuki vs. Honda Motor Co | Suzuki vs. Porsche Automobil Holding | Suzuki vs. Mazda Motor Corp |
| Yamaha vs. Volkswagen AG 110 | Yamaha vs. Porsche Automobil Holding | Yamaha vs. Ferrari NV | Yamaha vs. Bayerische Motoren Werke |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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