Correlation Between Suzuki and Mazda

Can any of the company-specific risk be diversified away by investing in both Suzuki and Mazda 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 Mazda 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 Mazda Motor Corp, you can compare the effects of market volatilities on Suzuki and Mazda 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 Mazda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzuki and Mazda.

Diversification Opportunities for Suzuki and Mazda

0.09

Correlation Coefficient

Suzuki  Mazda

Significant diversification

The 3 months correlation between Suzuki and Mazda is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Suzuki Motor Corp and Mazda Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mazda Motor Corp 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 Mazda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mazda Motor Corp has no effect on the direction of Suzuki i.e., Suzuki and Mazda go up and down completely randomly.

Pair Corralation between Suzuki and Mazda

Assuming the 90 days horizon Suzuki Motor Corp is expected to generate 0.8 times more return on investment than Mazda. However, Suzuki Motor Corp is 1.25 times less risky than Mazda. It trades about 0.35 of its potential returns per unit of risk. Mazda Motor Corp is currently generating about 0.0 per unit of risk. If you would invest  4,126  in Suzuki Motor Corp on September 16, 2024 and sell it today you would earn a total of  549.00  from holding Suzuki Motor Corp or generate 13.31% return on investment over 90 days.

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

Suzuki Motor Corp  vs.  Mazda Motor Corp

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.

Mazda Motor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mazda Motor 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 basic indicators 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 Suzuki and Mazda

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

The idea behind Suzuki Motor Corp and Mazda 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.