Correlation Between Australian Agricultural and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural 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 Australian Agricultural and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Hitachi Construction Machinery, you can compare the effects of market volatilities on Australian Agricultural 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 Australian Agricultural with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Hitachi Construction.
Diversification Opportunities for Australian Agricultural and Hitachi Construction
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Australian and Hitachi is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and Australian Agricultural 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 Australian Agricultural 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 Australian Agricultural i.e., Australian Agricultural and Hitachi Construction go up and down completely randomly.
Pair Corralation between Australian Agricultural and Hitachi Construction
Assuming the 90 days horizon Australian Agricultural is expected to generate 12.13 times less return on investment than Hitachi Construction. But when comparing it to its historical volatility, Australian Agricultural is 1.11 times less risky than Hitachi Construction. It trades about 0.01 of its potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,970 in Hitachi Construction Machinery on August 28, 2024 and sell it today you would earn a total of 90.00 from holding Hitachi Construction Machinery or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Australian Agricultural vs. Hitachi Construction Machinery
Performance |
| Timeline |
| Australian Agricultural |
| Hitachi Construction |
Australian Agricultural and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Hitachi Construction
The main advantage of trading using opposite Australian Agricultural and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural 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.| Australian Agricultural vs. Virtus Investment Partners | Australian Agricultural vs. Gladstone Investment | Australian Agricultural vs. EAT WELL INVESTMENT | Australian Agricultural vs. Seven West Media |
| Hitachi Construction vs. Superior Plus Corp | Hitachi Construction vs. NMI Holdings | Hitachi Construction vs. Origin Agritech | Hitachi Construction vs. SIVERS SEMICONDUCTORS AB |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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