Correlation Between CHINA TONTINE and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both CHINA TONTINE 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 CHINA TONTINE and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA TONTINE WINES and Hitachi Construction Machinery, you can compare the effects of market volatilities on CHINA TONTINE 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 CHINA TONTINE with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TONTINE and Hitachi Construction.
Diversification Opportunities for CHINA TONTINE and Hitachi Construction
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and Hitachi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TONTINE WINES and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and CHINA TONTINE 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 CHINA TONTINE WINES 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 CHINA TONTINE i.e., CHINA TONTINE and Hitachi Construction go up and down completely randomly.
Pair Corralation between CHINA TONTINE and Hitachi Construction
Assuming the 90 days trading horizon CHINA TONTINE WINES is expected to generate 22.21 times more return on investment than Hitachi Construction. However, CHINA TONTINE is 22.21 times more volatile than Hitachi Construction Machinery. It trades about 0.05 of its potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.0 per unit of risk. If you would invest 0.70 in CHINA TONTINE WINES on November 8, 2024 and sell it today you would earn a total of 6.30 from holding CHINA TONTINE WINES or generate 900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA TONTINE WINES vs. Hitachi Construction Machinery
Performance |
| Timeline |
| CHINA TONTINE WINES |
| Hitachi Construction |
CHINA TONTINE and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA TONTINE and Hitachi Construction
The main advantage of trading using opposite CHINA TONTINE and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TONTINE 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.| CHINA TONTINE vs. MGP Ingredients | CHINA TONTINE vs. NAKED WINES PLC | CHINA TONTINE vs. Superior Plus Corp | CHINA TONTINE vs. Origin Agritech |
| Hitachi Construction vs. Verizon Communications | Hitachi Construction vs. Singapore Telecommunications Limited | Hitachi Construction vs. Universal Health Realty | Hitachi Construction vs. CLOVER HEALTH INV |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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