Correlation Between RF Industries and Yaskawa Electric

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

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

Diversification Opportunities for RF Industries and Yaskawa Electric

-0.51

Correlation Coefficient

RF Industries  Yaskawa Electric

Excellent diversification

The 3 months correlation between RFIL and Yaskawa is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding RF Industries and Yaskawa Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yaskawa Electric Corp and RF Industries 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 RF Industries are associated (or correlated) with Yaskawa Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yaskawa Electric Corp has no effect on the direction of RF Industries i.e., RF Industries and Yaskawa Electric go up and down completely randomly.

Pair Corralation between RF Industries and Yaskawa Electric

Given the investment horizon of 90 days RF Industries is expected to generate 1.34 times more return on investment than Yaskawa Electric. However, RF Industries is 1.34 times more volatile than Yaskawa Electric Corp. It trades about 0.04 of its potential returns per unit of risk. Yaskawa Electric Corp is currently generating about -0.1 per unit of risk. If you would invest  395.00  in RF Industries on September 13, 2024 and sell it today you would earn a total of  22.00  from holding RF Industries or generate 5.57% return on investment over 90 days.

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

RF Industries  vs.  Yaskawa Electric Corp

RF Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RF Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward indicators, RF Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Yaskawa Electric Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yaskawa Electric Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with RF Industries and Yaskawa Electric

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

The idea behind RF Industries and Yaskawa Electric 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.