Correlation Between BNP Paribas and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both BNP Paribas 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 BNP Paribas and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNP Paribas SA and Hitachi Construction Machinery, you can compare the effects of market volatilities on BNP Paribas 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 BNP Paribas with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Hitachi Construction.
Diversification Opportunities for BNP Paribas and Hitachi Construction
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between BNP and Hitachi is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas 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 BNP Paribas 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 BNP Paribas 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 BNP Paribas i.e., BNP Paribas and Hitachi Construction go up and down completely randomly.
Pair Corralation between BNP Paribas and Hitachi Construction
Assuming the 90 days trading horizon BNP Paribas SA is expected to under-perform the Hitachi Construction. But the stock apears to be less risky and, when comparing its historical volatility, BNP Paribas SA is 1.45 times less risky than Hitachi Construction. The stock trades about -0.32 of its potential returns per unit of risk. The Hitachi Construction Machinery is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,940 in Hitachi Construction Machinery on September 1, 2024 and sell it today you would earn a total of 140.00 from holding Hitachi Construction Machinery or generate 7.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BNP Paribas SA vs. Hitachi Construction Machinery
Performance |
| Timeline |
| BNP Paribas SA |
| Hitachi Construction |
BNP Paribas and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Hitachi Construction
The main advantage of trading using opposite BNP Paribas and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas 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.| BNP Paribas vs. Hitachi Construction Machinery | BNP Paribas vs. INVITATION HOMES DL | BNP Paribas vs. Tri Pointe Homes | BNP Paribas vs. Granite Construction |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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