Correlation Between MOVIE GAMES and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both MOVIE GAMES and Hitachi Construction 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 MOVIE GAMES and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOVIE GAMES SA and Hitachi Construction Machinery, you can compare the effects of market volatilities on MOVIE GAMES and Hitachi Construction 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 MOVIE GAMES with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOVIE GAMES and Hitachi Construction.
Diversification Opportunities for MOVIE GAMES and Hitachi Construction
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MOVIE and Hitachi is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding MOVIE GAMES SA and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and MOVIE GAMES 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 MOVIE GAMES SA are associated (or correlated) with Hitachi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Construction has no effect on the direction of MOVIE GAMES i.e., MOVIE GAMES and Hitachi Construction go up and down completely randomly.
Pair Corralation between MOVIE GAMES and Hitachi Construction
Assuming the 90 days horizon MOVIE GAMES SA is expected to under-perform the Hitachi Construction. In addition to that, MOVIE GAMES is 1.62 times more volatile than Hitachi Construction Machinery. It trades about -0.07 of its total potential returns per unit of risk. Hitachi Construction Machinery is currently generating about -0.01 per unit of volatility. If you would invest 2,440 in Hitachi Construction Machinery on September 15, 2024 and sell it today you would lose (260.00) from holding Hitachi Construction Machinery or give up 10.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MOVIE GAMES SA vs. Hitachi Construction Machinery
Performance |
| Timeline |
| MOVIE GAMES SA |
| Hitachi Construction |
MOVIE GAMES and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MOVIE GAMES and Hitachi Construction
The main advantage of trading using opposite MOVIE GAMES and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOVIE GAMES position performs unexpectedly, Hitachi Construction 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 Hitachi Construction will offset losses from the drop in Hitachi Construction's long position.| MOVIE GAMES vs. MELIA HOTELS | MOVIE GAMES vs. PPHE HOTEL GROUP | MOVIE GAMES vs. Summit Hotel Properties | MOVIE GAMES vs. Fast Retailing Co |
| Hitachi Construction vs. Silicon Motion Technology | Hitachi Construction vs. MOVIE GAMES SA | Hitachi Construction vs. Eastman Chemical | Hitachi Construction vs. X FAB Silicon Foundries |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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