Correlation Between Yokogawa Electric and Vestas Wind

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

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

Diversification Opportunities for Yokogawa Electric and Vestas Wind

-0.37

Correlation Coefficient

Yokogawa Electric  Vestas Wind

Very good diversification

The 3 months correlation between Yokogawa and Vestas is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Yokogawa Electric Corp and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems and Yokogawa 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 Yokogawa Electric Corp are associated (or correlated) with Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of Yokogawa Electric i.e., Yokogawa Electric and Vestas Wind go up and down completely randomly.

Pair Corralation between Yokogawa Electric and Vestas Wind

Assuming the 90 days horizon Yokogawa Electric Corp is expected to generate 2.14 times more return on investment than Vestas Wind. However, Yokogawa Electric is 2.14 times more volatile than Vestas Wind Systems. It trades about 0.07 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about 0.05 per unit of risk. If you would invest  4,788  in Yokogawa Electric Corp on June 24, 2024 and sell it today you would earn a total of  254.00  from holding Yokogawa Electric Corp or generate 5.3% return on investment over 90 days.

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

Yokogawa Electric Corp  vs.  Vestas Wind Systems

Yokogawa Electric Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yokogawa Electric Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Yokogawa Electric showed solid returns over the last few months and may actually be approaching a breakup point.

Vestas Wind Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vestas Wind Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vestas Wind is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Yokogawa Electric and Vestas Wind

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

The idea behind Yokogawa Electric Corp and Vestas Wind Systems 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.