Correlation Between National Health and Hitachi
Can any of the company-specific risk be diversified away by investing in both National Health 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 National Health and Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Scan and Hitachi Ltd ADR, you can compare the effects of market volatilities on National Health 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 National Health with a short position of Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Hitachi.
Diversification Opportunities for National Health and Hitachi
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Hitachi is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding National Health Scan and Hitachi Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Ltd ADR and National Health 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 National Health Scan 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 Ltd ADR has no effect on the direction of National Health i.e., National Health and Hitachi go up and down completely randomly.
Pair Corralation between National Health and Hitachi
Given the investment horizon of 90 days National Health Scan is expected to generate 11.92 times more return on investment than Hitachi. However, National Health is 11.92 times more volatile than Hitachi Ltd ADR. It trades about 0.1 of its potential returns per unit of risk. Hitachi Ltd ADR is currently generating about 0.02 per unit of risk. If you would invest 2.00 in National Health Scan on September 13, 2024 and sell it today you would lose (0.40) from holding National Health Scan or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Scan vs. Hitachi Ltd ADR
Performance |
| Timeline |
| National Health Scan |
| Hitachi Ltd ADR |
National Health and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Hitachi
The main advantage of trading using opposite National Health and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health 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.| National Health vs. Arca Continental SAB | National Health vs. Becle SA de | National Health vs. Aquagold International | National Health vs. Morningstar Unconstrained Allocation |
| Hitachi vs. Teijin | Hitachi vs. Jardine Matheson Holdings | Hitachi vs. Marubeni Corp ADR | Hitachi vs. Mitsubishi Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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