Correlation Between CITIC and Hitachi
Can any of the company-specific risk be diversified away by investing in both CITIC and Hitachi 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 CITIC and Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITIC LTD ADR5 and Hitachi, you can compare the effects of market volatilities on CITIC and Hitachi 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 CITIC with a short position of Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC and Hitachi.
Diversification Opportunities for CITIC and Hitachi
Poor diversification
The 3 months correlation between CITIC and Hitachi is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CITIC LTD ADR5 and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi and CITIC 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 CITIC LTD ADR5 are associated (or correlated) with Hitachi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi has no effect on the direction of CITIC i.e., CITIC and Hitachi go up and down completely randomly.
Pair Corralation between CITIC and Hitachi
Assuming the 90 days trading horizon CITIC is expected to generate 2.23 times less return on investment than Hitachi. In addition to that, CITIC is 1.07 times more volatile than Hitachi. It trades about 0.04 of its total potential returns per unit of risk. Hitachi is currently generating about 0.09 per unit of volatility. If you would invest 979.00 in Hitachi on August 25, 2024 and sell it today you would earn a total of 1,374 from holding Hitachi or generate 140.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC LTD ADR5 vs. Hitachi
Performance |
| Timeline |
| CITIC LTD ADR5 |
| Hitachi |
CITIC and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC and Hitachi
The main advantage of trading using opposite CITIC and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC position performs unexpectedly, Hitachi 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 will offset losses from the drop in Hitachi's long position.| CITIC vs. MAVEN WIRELESS SWEDEN | CITIC vs. PLAYSTUDIOS A DL 0001 | CITIC vs. Tower One Wireless | CITIC vs. Ming Le Sports |
| Hitachi vs. MELIA HOTELS | Hitachi vs. Magnachip Semiconductor | Hitachi vs. TOREX SEMICONDUCTOR LTD | Hitachi vs. Playa Hotels Resorts |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |