Correlation Between Yamaha and Suzuki
Can any of the company-specific risk be diversified away by investing in both Yamaha and Suzuki 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 Suzuki 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 Suzuki Motor Corp, you can compare the effects of market volatilities on Yamaha and Suzuki 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 Suzuki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yamaha and Suzuki.
Diversification Opportunities for Yamaha and Suzuki
Significant diversification
The 3 months correlation between Yamaha and Suzuki is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Yamaha Motor Co and Suzuki Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzuki Motor Corp 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 Suzuki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzuki Motor Corp has no effect on the direction of Yamaha i.e., Yamaha and Suzuki go up and down completely randomly.
Pair Corralation between Yamaha and Suzuki
Assuming the 90 days horizon Yamaha Motor Co is expected to generate 30.91 times more return on investment than Suzuki. However, Yamaha is 30.91 times more volatile than Suzuki Motor Corp. It trades about 0.15 of its potential returns per unit of risk. Suzuki Motor Corp is currently generating about 0.05 per unit of risk. 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 |
Yamaha Motor Co vs. Suzuki Motor Corp
Performance |
| Timeline |
| Yamaha Motor |
| Suzuki Motor Corp |
Yamaha and Suzuki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yamaha and Suzuki
The main advantage of trading using opposite Yamaha and Suzuki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yamaha position performs unexpectedly, Suzuki 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 Suzuki will offset losses from the drop in Suzuki's long position.| Yamaha vs. Volkswagen AG 110 | Yamaha vs. Porsche Automobil Holding | Yamaha vs. Ferrari NV | Yamaha vs. Bayerische Motoren Werke |
| Suzuki vs. Isuzu Motors | Suzuki vs. Honda Motor Co | Suzuki vs. Porsche Automobil Holding | Suzuki vs. Mazda Motor Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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