Correlation Between Yokohama Rubber and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both Yokohama Rubber and Highlight Communications 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 Yokohama Rubber and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Yokohama Rubber and Highlight Communications AG, you can compare the effects of market volatilities on Yokohama Rubber and Highlight Communications 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 Yokohama Rubber with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokohama Rubber and Highlight Communications.
Diversification Opportunities for Yokohama Rubber and Highlight Communications
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yokohama and Highlight is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and Yokohama Rubber 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 The Yokohama Rubber are associated (or correlated) with Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of Yokohama Rubber i.e., Yokohama Rubber and Highlight Communications go up and down completely randomly.
Pair Corralation between Yokohama Rubber and Highlight Communications
Assuming the 90 days trading horizon Yokohama Rubber is expected to generate 8.5 times less return on investment than Highlight Communications. But when comparing it to its historical volatility, The Yokohama Rubber is 3.68 times less risky than Highlight Communications. It trades about 0.1 of its potential returns per unit of risk. Highlight Communications AG is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Highlight Communications AG on October 19, 2024 and sell it today you would earn a total of 53.00 from holding Highlight Communications AG or generate 53.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Yokohama Rubber vs. Highlight Communications AG
Performance |
| Timeline |
| Yokohama Rubber |
| Highlight Communications |
Yokohama Rubber and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yokohama Rubber and Highlight Communications
The main advantage of trading using opposite Yokohama Rubber and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yokohama Rubber position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.| Yokohama Rubber vs. ELL ENVIRONHLDGS HD 0001 | Yokohama Rubber vs. Khiron Life Sciences | Yokohama Rubber vs. RELIANCE STEEL AL | Yokohama Rubber vs. Shenandoah Telecommunications |
| Highlight Communications vs. The Yokohama Rubber | Highlight Communications vs. THRACE PLASTICS | Highlight Communications vs. NEWELL RUBBERMAID | Highlight Communications vs. ALBIS LEASING AG |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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