Correlation Between Hanshin Construction and Innometry
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction and Innometry 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 Hanshin Construction and Innometry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanshin Construction Co and Innometry Co, you can compare the effects of market volatilities on Hanshin Construction and Innometry 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 Hanshin Construction with a short position of Innometry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and Innometry.
Diversification Opportunities for Hanshin Construction and Innometry
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hanshin and Innometry is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and Innometry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innometry and Hanshin Construction 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 Hanshin Construction Co are associated (or correlated) with Innometry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innometry has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and Innometry go up and down completely randomly.
Pair Corralation between Hanshin Construction and Innometry
Assuming the 90 days trading horizon Hanshin Construction Co is expected to generate 1.52 times more return on investment than Innometry. However, Hanshin Construction is 1.52 times more volatile than Innometry Co. It trades about 0.06 of its potential returns per unit of risk. Innometry Co is currently generating about -0.21 per unit of risk. If you would invest 676,000 in Hanshin Construction Co on August 29, 2024 and sell it today you would earn a total of 24,000 from holding Hanshin Construction Co or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanshin Construction Co vs. Innometry Co
Performance |
| Timeline |
| Hanshin Construction |
| Innometry |
Hanshin Construction and Innometry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanshin Construction and Innometry
The main advantage of trading using opposite Hanshin Construction and Innometry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, Innometry 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 Innometry will offset losses from the drop in Innometry's long position.| Hanshin Construction vs. AptaBio Therapeutics | Hanshin Construction vs. Daewoo SBI SPAC | Hanshin Construction vs. Dream Security co | Hanshin Construction vs. Microfriend |
| Innometry vs. Daejoo Electronic Materials | Innometry vs. Parksystems Corp | Innometry vs. BH Co | Innometry vs. Partron Co |
Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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