Correlation Between HYDROFARM HLD and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both HYDROFARM HLD 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 HYDROFARM HLD and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HYDROFARM HLD GRP and Hitachi Construction Machinery, you can compare the effects of market volatilities on HYDROFARM HLD 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 HYDROFARM HLD with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and Hitachi Construction.
Diversification Opportunities for HYDROFARM HLD and Hitachi Construction
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between HYDROFARM and Hitachi is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and HYDROFARM HLD 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 HYDROFARM HLD GRP 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 HYDROFARM HLD i.e., HYDROFARM HLD and Hitachi Construction go up and down completely randomly.
Pair Corralation between HYDROFARM HLD and Hitachi Construction
Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to generate 2.32 times more return on investment than Hitachi Construction. However, HYDROFARM HLD is 2.32 times more volatile than Hitachi Construction Machinery. It trades about 0.15 of its potential returns per unit of risk. Hitachi Construction Machinery is currently generating about -0.01 per unit of risk. If you would invest 60.00 in HYDROFARM HLD GRP on August 30, 2024 and sell it today you would earn a total of 17.00 from holding HYDROFARM HLD GRP or generate 28.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HYDROFARM HLD GRP vs. Hitachi Construction Machinery
Performance |
| Timeline |
| HYDROFARM HLD GRP |
| Hitachi Construction |
HYDROFARM HLD and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYDROFARM HLD and Hitachi Construction
The main advantage of trading using opposite HYDROFARM HLD and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYDROFARM HLD 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.| HYDROFARM HLD vs. Daimler Truck Holding | HYDROFARM HLD vs. Superior Plus Corp | HYDROFARM HLD vs. NMI Holdings | HYDROFARM HLD vs. Origin Agritech |
| Hitachi Construction vs. CNH Industrial NV | Hitachi Construction vs. Terex | Hitachi Construction vs. Superior Plus Corp | Hitachi Construction vs. NMI Holdings |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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