Correlation Between Yamaha and CGX Energy
Can any of the company-specific risk be diversified away by investing in both Yamaha and CGX 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 Yamaha and CGX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yamaha Motor Co and CGX Energy, you can compare the effects of market volatilities on Yamaha and CGX 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 Yamaha with a short position of CGX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yamaha and CGX Energy.
Diversification Opportunities for Yamaha and CGX Energy
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yamaha and CGX is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Yamaha Motor Co and CGX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGX Energy and Yamaha 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 Yamaha Motor Co are associated (or correlated) with CGX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGX Energy has no effect on the direction of Yamaha i.e., Yamaha and CGX Energy go up and down completely randomly.
Pair Corralation between Yamaha and CGX Energy
Assuming the 90 days horizon Yamaha Motor Co is expected to under-perform the CGX Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Yamaha Motor Co is 3.21 times less risky than CGX Energy. The pink sheet trades about -0.05 of its potential returns per unit of risk. The CGX Energy is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 24.00 in CGX Energy on September 1, 2024 and sell it today you would lose (9.00) from holding CGX Energy or give up 37.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Yamaha Motor Co vs. CGX Energy
Performance |
| Timeline |
| Yamaha Motor |
| CGX Energy |
Yamaha and CGX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yamaha and CGX Energy
The main advantage of trading using opposite Yamaha and CGX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yamaha position performs unexpectedly, CGX 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 CGX Energy will offset losses from the drop in CGX Energy's long position.| Yamaha vs. Isuzu Motors | Yamaha vs. Renault SA | Yamaha vs. Mazda Motor Corp | Yamaha vs. Bayerische Motoren Werke |
| CGX Energy vs. Avanti Energy | CGX Energy vs. Desert Mountain Energy | CGX Energy vs. Royal Helium | CGX Energy vs. Eco Oil Gas |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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