Correlation Between Arca Continental and Hitachi
Can any of the company-specific risk be diversified away by investing in both Arca Continental 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 Arca Continental and Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arca Continental SAB and Hitachi, you can compare the effects of market volatilities on Arca Continental 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 Arca Continental with a short position of Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arca Continental and Hitachi.
Diversification Opportunities for Arca Continental and Hitachi
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Arca and Hitachi is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Arca Continental SAB and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi and Arca Continental 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 Arca Continental SAB 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 Arca Continental i.e., Arca Continental and Hitachi go up and down completely randomly.
Pair Corralation between Arca Continental and Hitachi
Assuming the 90 days horizon Arca Continental SAB is expected to generate 0.66 times more return on investment than Hitachi. However, Arca Continental SAB is 1.52 times less risky than Hitachi. It trades about 0.11 of its potential returns per unit of risk. Hitachi is currently generating about 0.03 per unit of risk. If you would invest 822.00 in Arca Continental SAB on September 12, 2024 and sell it today you would earn a total of 52.00 from holding Arca Continental SAB or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Arca Continental SAB vs. Hitachi
Performance |
| Timeline |
| Arca Continental SAB |
| Hitachi |
Arca Continental and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arca Continental and Hitachi
The main advantage of trading using opposite Arca Continental and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arca Continental 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.| Arca Continental vs. The Coca Cola | Arca Continental vs. Monster Beverage Corp | Arca Continental vs. Celsius Holdings | Arca Continental vs. Coca Cola Consolidated |
| Hitachi vs. Arca Continental SAB | Hitachi vs. Becle SA de | Hitachi vs. Aquagold International | Hitachi vs. Morningstar Unconstrained Allocation |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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