Correlation Between Yamaha and Honda
Can any of the company-specific risk be diversified away by investing in both Yamaha and Honda 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 Honda 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 Honda Motor Co, you can compare the effects of market volatilities on Yamaha and Honda 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 Honda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yamaha and Honda.
Diversification Opportunities for Yamaha and Honda
Weak diversification
The 3 months correlation between Yamaha and Honda is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Yamaha Motor Co and Honda Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor 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 Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of Yamaha i.e., Yamaha and Honda go up and down completely randomly.
Pair Corralation between Yamaha and Honda
Assuming the 90 days horizon Yamaha Motor Co is expected to generate 0.93 times more return on investment than Honda. However, Yamaha Motor Co is 1.08 times less risky than Honda. It trades about -0.11 of its potential returns per unit of risk. Honda Motor Co is currently generating about -0.32 per unit of risk. If you would invest 869.00 in Yamaha Motor Co on August 27, 2024 and sell it today you would lose (42.00) from holding Yamaha Motor Co or give up 4.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yamaha Motor Co vs. Honda Motor Co
Performance |
| Timeline |
| Yamaha Motor |
| Honda Motor |
Yamaha and Honda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yamaha and Honda
The main advantage of trading using opposite Yamaha and Honda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yamaha position performs unexpectedly, Honda 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 Honda will offset losses from the drop in Honda's long position.| Yamaha vs. Isuzu Motors | Yamaha vs. Renault SA | Yamaha vs. Toyota Motor Corp | Yamaha vs. Porsche Automobile Holding |
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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