Correlation Between Yoshitsu and Genuine Parts

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

By analyzing existing cross correlation between Yoshitsu Co Ltd and Genuine Parts Co, you can compare the effects of market volatilities on Yoshitsu and Genuine Parts 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 Yoshitsu with a short position of Genuine Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yoshitsu and Genuine Parts.

Diversification Opportunities for Yoshitsu and Genuine Parts

-0.31

Correlation Coefficient

Yoshitsu  Genuine Parts

Very good diversification

The 3 months correlation between Yoshitsu and Genuine is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Yoshitsu Co Ltd and Genuine Parts Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts and Yoshitsu 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 Yoshitsu Co Ltd are associated (or correlated) with Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of Yoshitsu i.e., Yoshitsu and Genuine Parts go up and down completely randomly.

Pair Corralation between Yoshitsu and Genuine Parts

Given the investment horizon of 90 days Yoshitsu is expected to generate 12.39 times less return on investment than Genuine Parts. In addition to that, Yoshitsu is 1.58 times more volatile than Genuine Parts Co. It trades about 0.01 of its total potential returns per unit of risk. Genuine Parts Co is currently generating about 0.16 per unit of volatility. If you would invest  14,475  in Genuine Parts Co on February 14, 2024 and sell it today you would earn a total of  1,278  from holding Genuine Parts Co or generate 8.83% return on investment over 90 days.

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

Yoshitsu Co Ltd  vs.  Genuine Parts Co

Yoshitsu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yoshitsu Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Genuine Parts

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genuine Parts Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Genuine Parts may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Yoshitsu and Genuine Parts

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

The idea behind Yoshitsu Co Ltd and Genuine Parts Co 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.