Correlation Between Postal Savings and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both Postal Savings 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 Postal Savings and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postal Savings Bank and Hitachi Construction Machinery, you can compare the effects of market volatilities on Postal Savings 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 Postal Savings with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and Hitachi Construction.
Diversification Opportunities for Postal Savings and Hitachi Construction
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Postal and Hitachi is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and Postal Savings 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 Postal Savings Bank 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 Postal Savings i.e., Postal Savings and Hitachi Construction go up and down completely randomly.
Pair Corralation between Postal Savings and Hitachi Construction
Assuming the 90 days horizon Postal Savings Bank is expected to generate 4.21 times more return on investment than Hitachi Construction. However, Postal Savings is 4.21 times more volatile than Hitachi Construction Machinery. It trades about 0.09 of its potential returns per unit of risk. Hitachi Construction Machinery is currently generating about -0.07 per unit of risk. If you would invest 26.00 in Postal Savings Bank on August 25, 2024 and sell it today you would earn a total of 28.00 from holding Postal Savings Bank or generate 107.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postal Savings Bank vs. Hitachi Construction Machinery
Performance |
| Timeline |
| Postal Savings Bank |
| Hitachi Construction |
Postal Savings and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Savings and Hitachi Construction
The main advantage of trading using opposite Postal Savings and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Savings 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.| Postal Savings vs. Deutsche Bank Aktiengesellschaft | Postal Savings vs. Superior Plus Corp | Postal Savings vs. NMI Holdings | Postal Savings vs. Origin Agritech |
| Hitachi Construction vs. KUBOTA P ADR20 | Hitachi Construction vs. Superior Plus Corp | Hitachi Construction vs. NMI Holdings | Hitachi Construction vs. Origin Agritech |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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