Correlation Between Global Tech and Hitachi
Can any of the company-specific risk be diversified away by investing in both Global Tech 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 Global Tech and Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Tech Industries and Hitachi Ltd ADR, you can compare the effects of market volatilities on Global Tech 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 Global Tech with a short position of Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Tech and Hitachi.
Diversification Opportunities for Global Tech and Hitachi
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Hitachi is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Global Tech Industries 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 Global Tech 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 Global Tech Industries 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 Global Tech i.e., Global Tech and Hitachi go up and down completely randomly.
Pair Corralation between Global Tech and Hitachi
Given the investment horizon of 90 days Global Tech Industries is expected to generate 31.59 times more return on investment than Hitachi. However, Global Tech is 31.59 times more volatile than Hitachi Ltd ADR. It trades about 0.27 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 0.50 in Global Tech Industries on September 13, 2024 and sell it today you would earn a total of 1.06 from holding Global Tech Industries or generate 212.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Tech Industries vs. Hitachi Ltd ADR
Performance |
| Timeline |
| Global Tech Industries |
| Hitachi Ltd ADR |
Global Tech and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Tech and Hitachi
The main advantage of trading using opposite Global Tech and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Tech 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.| Global Tech vs. HUMANA INC | Global Tech vs. Barloworld Ltd ADR | Global Tech vs. Morningstar Unconstrained Allocation | Global Tech vs. Thrivent High Yield |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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