Correlation Between YASKAWA ELEC and Canon Marketing

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

By analyzing existing cross correlation between YASKAWA ELEC UNSP and Canon Marketing Japan, you can compare the effects of market volatilities on YASKAWA ELEC and Canon Marketing 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 ELEC with a short position of Canon Marketing. Check out your portfolio center. Please also check ongoing floating volatility patterns of YASKAWA ELEC and Canon Marketing.

Diversification Opportunities for YASKAWA ELEC and Canon Marketing

-0.26

Correlation Coefficient

YASKAWA ELEC  Canon Marketing

Very good diversification

The 3 months correlation between YASKAWA and Canon is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding YASKAWA ELEC UNSP and Canon Marketing Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Marketing Japan and YASKAWA ELEC 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 ELEC UNSP are associated (or correlated) with Canon Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Marketing Japan has no effect on the direction of YASKAWA ELEC i.e., YASKAWA ELEC and Canon Marketing go up and down completely randomly.

Pair Corralation between YASKAWA ELEC and Canon Marketing

Assuming the 90 days trading horizon YASKAWA ELEC UNSP is expected to under-perform the Canon Marketing. In addition to that, YASKAWA ELEC is 1.19 times more volatile than Canon Marketing Japan. It trades about -0.12 of its total potential returns per unit of risk. Canon Marketing Japan is currently generating about 0.04 per unit of volatility. If you would invest  2,980  in Canon Marketing Japan on September 15, 2024 and sell it today you would earn a total of  100.00  from holding Canon Marketing Japan or generate 3.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

YASKAWA ELEC UNSP  vs.  Canon Marketing Japan

YASKAWA ELEC UNSP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YASKAWA ELEC UNSP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Canon Marketing Japan

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canon Marketing Japan are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Canon Marketing is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with YASKAWA ELEC and Canon Marketing

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

The idea behind YASKAWA ELEC UNSP and Canon Marketing Japan 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.