Correlation Between Yaskawa Electric and Keyence

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

Diversification Opportunities for Yaskawa Electric and Keyence

0.91

Correlation Coefficient

Yaskawa Electric  Keyence

Almost no diversification

The 3 months correlation between Yaskawa and Keyence is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Yaskawa Electric Corp and Keyence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyence 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 Keyence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyence has no effect on the direction of Yaskawa Electric i.e., Yaskawa Electric and Keyence go up and down completely randomly.

Pair Corralation between Yaskawa Electric and Keyence

Assuming the 90 days horizon Yaskawa Electric Corp is expected to under-perform the Keyence. But the pink sheet apears to be less risky and, when comparing its historical volatility, Yaskawa Electric Corp is 1.24 times less risky than Keyence. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Keyence is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  43,730  in Keyence on August 29, 2024 and sell it today you would lose (1,230) from holding Keyence or give up 2.81% of portfolio value over 90 days.

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

Yaskawa Electric Corp  vs.  Keyence

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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Keyence

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Yaskawa Electric and Keyence

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

The idea behind Yaskawa Electric Corp and Keyence 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.