Correlation Between Eastman Chemical and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical 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 Eastman Chemical and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Hitachi Construction Machinery, you can compare the effects of market volatilities on Eastman Chemical 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 Eastman Chemical with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Hitachi Construction.
Diversification Opportunities for Eastman Chemical and Hitachi Construction
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eastman and Hitachi is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical i.e., Eastman Chemical and Hitachi Construction go up and down completely randomly.
Pair Corralation between Eastman Chemical and Hitachi Construction
Assuming the 90 days horizon Eastman Chemical is expected to generate 0.68 times more return on investment than Hitachi Construction. However, Eastman Chemical is 1.47 times less risky than Hitachi Construction. It trades about 0.08 of its potential returns per unit of risk. Hitachi Construction Machinery is currently generating about -0.01 per unit of risk. If you would invest 7,150 in Eastman Chemical on September 15, 2024 and sell it today you would earn a total of 2,234 from holding Eastman Chemical or generate 31.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Hitachi Construction Machinery
Performance |
| Timeline |
| Eastman Chemical |
| Hitachi Construction |
Eastman Chemical and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Hitachi Construction
The main advantage of trading using opposite Eastman Chemical and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical 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.| Eastman Chemical vs. Monster Beverage Corp | Eastman Chemical vs. MOLSON RS BEVERAGE | Eastman Chemical vs. Fevertree Drinks PLC | Eastman Chemical vs. Auto Trader Group |
| Hitachi Construction vs. Silicon Motion Technology | Hitachi Construction vs. MOVIE GAMES SA | Hitachi Construction vs. Eastman Chemical | Hitachi Construction vs. X FAB Silicon Foundries |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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