Correlation Between Isuzu Motors and Suzuki

Can any of the company-specific risk be diversified away by investing in both Isuzu Motors 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 Isuzu Motors and Suzuki into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Isuzu Motors and Suzuki Motor Corp, you can compare the effects of market volatilities on Isuzu Motors 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 Isuzu Motors with a short position of Suzuki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Isuzu Motors and Suzuki.

Diversification Opportunities for Isuzu Motors and Suzuki

0.7

Correlation Coefficient

Isuzu Motors  Suzuki

Poor diversification

The 3 months correlation between Isuzu and Suzuki is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Isuzu Motors 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 Isuzu Motors 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 Isuzu Motors 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 Isuzu Motors i.e., Isuzu Motors and Suzuki go up and down completely randomly.

Pair Corralation between Isuzu Motors and Suzuki

Assuming the 90 days horizon Isuzu Motors is expected to generate 680.5 times less return on investment than Suzuki. But when comparing it to its historical volatility, Isuzu Motors is 1.22 times less risky than Suzuki. It trades about 0.0 of its potential returns per unit of risk. Suzuki Motor Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,331  in Suzuki Motor Corp on September 15, 2024 and sell it today you would earn a total of  344.00  from holding Suzuki Motor Corp or generate 7.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Isuzu Motors  vs.  Suzuki Motor Corp

Isuzu Motors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Isuzu Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Isuzu Motors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Suzuki Motor Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Suzuki Motor Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Suzuki may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Isuzu Motors and Suzuki

The main advantage of trading using opposite Isuzu Motors and Suzuki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Isuzu Motors 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.

The idea behind Isuzu Motors and Suzuki Motor Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.