Correlation Between Berkshire Hathaway and Komatsu
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Komatsu 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 Berkshire Hathaway and Komatsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Komatsu, you can compare the effects of market volatilities on Berkshire Hathaway and Komatsu 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 Berkshire Hathaway with a short position of Komatsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Komatsu.
Diversification Opportunities for Berkshire Hathaway and Komatsu
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Komatsu is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Komatsu go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Komatsu
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 32.72 times more return on investment than Komatsu. However, Berkshire Hathaway is 32.72 times more volatile than Komatsu. It trades about 0.06 of its potential returns per unit of risk. Komatsu is currently generating about 0.03 per unit of risk. If you would invest 49,850,000 in Berkshire Hathaway on September 12, 2024 and sell it today you would earn a total of 16,300,000 from holding Berkshire Hathaway or generate 32.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Komatsu
Performance |
| Timeline |
| Berkshire Hathaway |
| Komatsu |
Berkshire Hathaway and Komatsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Komatsu
The main advantage of trading using opposite Berkshire Hathaway and Komatsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Komatsu 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 Komatsu will offset losses from the drop in Komatsu's long position.| Berkshire Hathaway vs. Zurich Insurance Group | Berkshire Hathaway vs. Superior Plus Corp | Berkshire Hathaway vs. SIVERS SEMICONDUCTORS AB | Berkshire Hathaway vs. CHINA HUARONG ENERHD 50 |
| Komatsu vs. Gold Road Resources | Komatsu vs. Transport International Holdings | Komatsu vs. Air Transport Services | Komatsu vs. Thai Beverage Public |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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