Correlation Between CITY OFFICE and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE 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 CITY OFFICE and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITY OFFICE REIT and Hitachi Construction Machinery, you can compare the effects of market volatilities on CITY OFFICE 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 CITY OFFICE with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and Hitachi Construction.
Diversification Opportunities for CITY OFFICE and Hitachi Construction
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CITY and Hitachi is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and CITY OFFICE 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 CITY OFFICE REIT 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 CITY OFFICE i.e., CITY OFFICE and Hitachi Construction go up and down completely randomly.
Pair Corralation between CITY OFFICE and Hitachi Construction
Assuming the 90 days horizon CITY OFFICE REIT is expected to under-perform the Hitachi Construction. In addition to that, CITY OFFICE is 1.68 times more volatile than Hitachi Construction Machinery. It trades about -0.01 of its total potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.02 per unit of volatility. If you would invest 2,160 in Hitachi Construction Machinery on November 5, 2024 and sell it today you would earn a total of 120.00 from holding Hitachi Construction Machinery or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. Hitachi Construction Machinery
Performance |
| Timeline |
| CITY OFFICE REIT |
| Hitachi Construction |
CITY OFFICE and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and Hitachi Construction
The main advantage of trading using opposite CITY OFFICE and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE 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.| CITY OFFICE vs. The Boston Beer | CITY OFFICE vs. Spirent Communications plc | CITY OFFICE vs. Chunghwa Telecom Co | CITY OFFICE vs. United Breweries Co |
| Hitachi Construction vs. BANK OF CHINA | Hitachi Construction vs. Fast Retailing Co | Hitachi Construction vs. Meta Financial Group | Hitachi Construction vs. REVO INSURANCE SPA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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