Correlation Between Yokohama Rubber and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both Yokohama Rubber and THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS, you can compare the effects of market volatilities on Yokohama Rubber and THRACE PLASTICS 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 THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokohama Rubber and THRACE PLASTICS.
Diversification Opportunities for Yokohama Rubber and THRACE PLASTICS
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yokohama and THRACE is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of Yokohama Rubber i.e., Yokohama Rubber and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between Yokohama Rubber and THRACE PLASTICS
Assuming the 90 days trading horizon Yokohama Rubber is expected to generate 1.62 times less return on investment than THRACE PLASTICS. But when comparing it to its historical volatility, The Yokohama Rubber is 1.22 times less risky than THRACE PLASTICS. It trades about 0.09 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 387.00 in THRACE PLASTICS on November 1, 2024 and sell it today you would earn a total of 13.00 from holding THRACE PLASTICS or generate 3.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
The Yokohama Rubber vs. THRACE PLASTICS
Performance |
| Timeline |
| Yokohama Rubber |
| THRACE PLASTICS |
Yokohama Rubber and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yokohama Rubber and THRACE PLASTICS
The main advantage of trading using opposite Yokohama Rubber and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yokohama Rubber position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.| Yokohama Rubber vs. SOGECLAIR SA INH | Yokohama Rubber vs. Wizz Air Holdings | Yokohama Rubber vs. Air New Zealand | Yokohama Rubber vs. TRI CHEMICAL LABORATINC |
| THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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