Correlation Between Booking Holdings and Yamaha

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

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

Diversification Opportunities for Booking Holdings and Yamaha

-0.88

Correlation Coefficient

Booking Holdings  Yamaha

Pay attention - limited upside

The 3 months correlation between Booking and Yamaha is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Yamaha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha and Booking Holdings 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 Booking Holdings are associated (or correlated) with Yamaha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamaha has no effect on the direction of Booking Holdings i.e., Booking Holdings and Yamaha go up and down completely randomly.

Pair Corralation between Booking Holdings and Yamaha

Assuming the 90 days trading horizon Booking Holdings is expected to under-perform the Yamaha. But the stock apears to be less risky and, when comparing its historical volatility, Booking Holdings is 1.41 times less risky than Yamaha. The stock trades about -0.08 of its potential returns per unit of risk. The Yamaha is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  665.00  in Yamaha on September 23, 2024 and sell it today you would earn a total of  12.00  from holding Yamaha or generate 1.8% return on investment over 90 days.

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

Booking Holdings  vs.  Yamaha

Booking Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Booking Holdings are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Booking Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Yamaha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yamaha has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yamaha is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Booking Holdings and Yamaha

The main advantage of trading using opposite Booking Holdings and Yamaha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booking Holdings position performs unexpectedly, Yamaha 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 Yamaha will offset losses from the drop in Yamaha's long position.

The idea behind Booking Holdings and Yamaha 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.