Correlation Between CSX and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both CSX 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 CSX and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSX Corporation and Hitachi Construction Machinery, you can compare the effects of market volatilities on CSX 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 CSX with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSX and Hitachi Construction.
Diversification Opportunities for CSX and Hitachi Construction
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CSX and Hitachi is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding CSX Corp. and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and CSX 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 CSX Corporation 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 CSX i.e., CSX and Hitachi Construction go up and down completely randomly.
Pair Corralation between CSX and Hitachi Construction
Assuming the 90 days trading horizon CSX Corporation is expected to under-perform the Hitachi Construction. In addition to that, CSX is 1.09 times more volatile than Hitachi Construction Machinery. It trades about -0.21 of its total potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.36 per unit of volatility. If you would invest 2,000 in Hitachi Construction Machinery on September 14, 2024 and sell it today you would earn a total of 200.00 from holding Hitachi Construction Machinery or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSX Corp. vs. Hitachi Construction Machinery
Performance |
| Timeline |
| CSX Corporation |
| Hitachi Construction |
CSX and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSX and Hitachi Construction
The main advantage of trading using opposite CSX and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSX 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.| CSX vs. Hitachi Construction Machinery | CSX vs. GALENA MINING LTD | CSX vs. MCEWEN MINING INC | CSX vs. Federal Agricultural Mortgage |
| Hitachi Construction vs. Superior Plus Corp | Hitachi Construction vs. SIVERS SEMICONDUCTORS AB | Hitachi Construction vs. NorAm Drilling AS | Hitachi Construction vs. Norsk Hydro ASA |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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