Correlation Between Hitachi Construction and Ares Management
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and Ares Management 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 Hitachi Construction and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hitachi Construction Machinery and Ares Management Corp, you can compare the effects of market volatilities on Hitachi Construction and Ares Management 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 Hitachi Construction with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and Ares Management.
Diversification Opportunities for Hitachi Construction and Ares Management
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hitachi and Ares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and Ares Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management Corp and Hitachi Construction 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 Hitachi Construction Machinery are associated (or correlated) with Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management Corp has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and Ares Management go up and down completely randomly.
Pair Corralation between Hitachi Construction and Ares Management
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 0.85 times more return on investment than Ares Management. However, Hitachi Construction Machinery is 1.18 times less risky than Ares Management. It trades about 0.35 of its potential returns per unit of risk. Ares Management Corp is currently generating about 0.25 per unit of risk. If you would invest 2,060 in Hitachi Construction Machinery on October 30, 2024 and sell it today you would earn a total of 220.00 from holding Hitachi Construction Machinery or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. Ares Management Corp
Performance |
| Timeline |
| Hitachi Construction |
| Ares Management Corp |
Hitachi Construction and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and Ares Management
The main advantage of trading using opposite Hitachi Construction and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, Ares Management 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 Ares Management will offset losses from the drop in Ares Management's long position.| Hitachi Construction vs. Japan Medical Dynamic | Hitachi Construction vs. PEPTONIC MEDICAL | Hitachi Construction vs. NURAN WIRELESS INC | Hitachi Construction vs. KENEDIX OFFICE INV |
| Ares Management vs. Blackstone Group | Ares Management vs. The Bank of | Ares Management vs. Ameriprise Financial | Ares Management vs. State Street |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |