Correlation Between ELMOS SEMICONDUCTOR and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELMOS SEMICONDUCTOR and Hitachi Construction Machinery, you can compare the effects of market volatilities on ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELMOS SEMICONDUCTOR and Hitachi Construction.
Diversification Opportunities for ELMOS SEMICONDUCTOR and Hitachi Construction
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ELMOS and Hitachi is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and Hitachi Construction go up and down completely randomly.
Pair Corralation between ELMOS SEMICONDUCTOR and Hitachi Construction
Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to generate 1.83 times less return on investment than Hitachi Construction. In addition to that, ELMOS SEMICONDUCTOR is 2.05 times more volatile than Hitachi Construction Machinery. It trades about 0.04 of its total potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.13 per unit of volatility. If you would invest 1,940 in Hitachi Construction Machinery on August 26, 2024 and sell it today you would earn a total of 120.00 from holding Hitachi Construction Machinery or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELMOS SEMICONDUCTOR vs. Hitachi Construction Machinery
Performance |
| Timeline |
| ELMOS SEMICONDUCTOR |
| Hitachi Construction |
ELMOS SEMICONDUCTOR and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELMOS SEMICONDUCTOR and Hitachi Construction
The main advantage of trading using opposite ELMOS SEMICONDUCTOR and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELMOS SEMICONDUCTOR 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.| ELMOS SEMICONDUCTOR vs. NH HOTEL GROUP | ELMOS SEMICONDUCTOR vs. InterContinental Hotels Group | ELMOS SEMICONDUCTOR vs. Xenia Hotels Resorts | ELMOS SEMICONDUCTOR vs. Hyatt Hotels |
| Hitachi Construction vs. KUBOTA P ADR20 | Hitachi Construction vs. Superior Plus Corp | Hitachi Construction vs. NMI Holdings | Hitachi Construction vs. Origin Agritech |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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