Correlation Between Yokohama Rubber and ENERGY ONE

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

By analyzing existing cross correlation between The Yokohama Rubber and ENERGY ONE, you can compare the effects of market volatilities on Yokohama Rubber and ENERGY ONE 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 Yokohama Rubber with a short position of ENERGY ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokohama Rubber and ENERGY ONE.

Diversification Opportunities for Yokohama Rubber and ENERGY ONE

0.67

Correlation Coefficient

Yokohama Rubber  ENERGY ONE

Poor diversification

The 3 months correlation between Yokohama and ENERGY is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and ENERGY ONE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGY ONE and Yokohama Rubber 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 The Yokohama Rubber are associated (or correlated) with ENERGY ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGY ONE has no effect on the direction of Yokohama Rubber i.e., Yokohama Rubber and ENERGY ONE go up and down completely randomly.

Pair Corralation between Yokohama Rubber and ENERGY ONE

Assuming the 90 days trading horizon The Yokohama Rubber is expected to generate 1.11 times more return on investment than ENERGY ONE. However, Yokohama Rubber is 1.11 times more volatile than ENERGY ONE. It trades about 0.09 of its potential returns per unit of risk. ENERGY ONE is currently generating about 0.01 per unit of risk. If you would invest  2,191  in The Yokohama Rubber on March 31, 2025 and sell it today you would earn a total of  89.00  from holding The Yokohama Rubber or generate 4.06% return on investment over 90 days.

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

The Yokohama Rubber  vs.  ENERGY ONE

Yokohama Rubber

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Yokohama Rubber are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, Yokohama Rubber may actually be approaching a critical reversion point that can send shares even higher in July 2025.

ENERGY ONE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENERGY ONE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, ENERGY ONE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yokohama Rubber and ENERGY ONE

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

The idea behind The Yokohama Rubber and ENERGY ONE 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.