Correlation Between Yaskawa Electric and RF Industries

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

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

Diversification Opportunities for Yaskawa Electric and RF Industries

-0.5

Correlation Coefficient

Yaskawa Electric  RF Industries

Very good diversification

The 3 months correlation between Yaskawa and RFIL is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Yaskawa Electric Corp and RF Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Industries and Yaskawa Electric 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 Yaskawa Electric Corp are associated (or correlated) with RF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Industries has no effect on the direction of Yaskawa Electric i.e., Yaskawa Electric and RF Industries go up and down completely randomly.

Pair Corralation between Yaskawa Electric and RF Industries

Assuming the 90 days horizon Yaskawa Electric Corp is expected to under-perform the RF Industries. But the pink sheet apears to be less risky and, when comparing its historical volatility, Yaskawa Electric Corp is 1.39 times less risky than RF Industries. The pink sheet trades about -0.11 of its potential returns per unit of risk. The RF Industries is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  370.00  in RF Industries on September 12, 2024 and sell it today you would earn a total of  48.00  from holding RF Industries or generate 12.97% return on investment over 90 days.

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

Yaskawa Electric Corp  vs.  RF Industries

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.

RF Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RF Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward indicators, RF Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yaskawa Electric and RF Industries

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

The idea behind Yaskawa Electric Corp and RF Industries 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.