Correlation Between Suzuki and Bayerische Motoren

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

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

Diversification Opportunities for Suzuki and Bayerische Motoren

0.14

Correlation Coefficient

Suzuki  Bayerische Motoren

Average diversification

The 3 months correlation between Suzuki and Bayerische is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Suzuki Motor Corp and Bayerische Motoren Werke in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayerische Motoren Werke and Suzuki 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 Suzuki Motor Corp are associated (or correlated) with Bayerische Motoren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayerische Motoren Werke has no effect on the direction of Suzuki i.e., Suzuki and Bayerische Motoren go up and down completely randomly.

Pair Corralation between Suzuki and Bayerische Motoren

Assuming the 90 days horizon Suzuki Motor Corp is expected to generate 0.92 times more return on investment than Bayerische Motoren. However, Suzuki Motor Corp is 1.09 times less risky than Bayerische Motoren. It trades about 0.07 of its potential returns per unit of risk. Bayerische Motoren Werke is currently generating about 0.04 per unit of risk. 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	Insignificant
Accuracy	96.88%
Values	Daily Returns

Suzuki Motor Corp  vs.  Bayerische Motoren Werke

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.

Bayerische Motoren Werke

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bayerische Motoren Werke are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Bayerische Motoren is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Suzuki and Bayerische Motoren

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

The idea behind Suzuki Motor Corp and Bayerische Motoren Werke 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.