Correlation Between Yokohama Rubber and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Yokohama Rubber and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS, you can compare the effects of market volatilities on Yokohama Rubber and STMICROELECTRONICS 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 STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokohama Rubber and STMICROELECTRONICS.
Diversification Opportunities for Yokohama Rubber and STMICROELECTRONICS
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Yokohama and STMICROELECTRONICS is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of Yokohama Rubber i.e., Yokohama Rubber and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between Yokohama Rubber and STMICROELECTRONICS
Assuming the 90 days trading horizon The Yokohama Rubber is expected to under-perform the STMICROELECTRONICS. But the stock apears to be less risky and, when comparing its historical volatility, The Yokohama Rubber is 1.96 times less risky than STMICROELECTRONICS. The stock trades about -0.04 of its potential returns per unit of risk. The STMICROELECTRONICS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,403 in STMICROELECTRONICS on October 25, 2024 and sell it today you would earn a total of 43.00 from holding STMICROELECTRONICS or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Yokohama Rubber vs. STMICROELECTRONICS
Performance |
| Timeline |
| Yokohama Rubber |
| STMICROELECTRONICS |
Yokohama Rubber and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yokohama Rubber and STMICROELECTRONICS
The main advantage of trading using opposite Yokohama Rubber and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yokohama Rubber position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.| Yokohama Rubber vs. Allegheny Technologies Incorporated | Yokohama Rubber vs. Micron Technology | Yokohama Rubber vs. COMPUTERSHARE | Yokohama Rubber vs. BioNTech SE |
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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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