Correlation Between Hitachi Construction and SANOK RUBBER
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and SANOK RUBBER 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 SANOK RUBBER 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 SANOK RUBBER ZY, you can compare the effects of market volatilities on Hitachi Construction and SANOK RUBBER 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 SANOK RUBBER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and SANOK RUBBER.
Diversification Opportunities for Hitachi Construction and SANOK RUBBER
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hitachi and SANOK is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and SANOK RUBBER ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANOK RUBBER ZY 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 SANOK RUBBER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANOK RUBBER ZY has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and SANOK RUBBER go up and down completely randomly.
Pair Corralation between Hitachi Construction and SANOK RUBBER
Assuming the 90 days horizon Hitachi Construction is expected to generate 1.59 times less return on investment than SANOK RUBBER. But when comparing it to its historical volatility, Hitachi Construction Machinery is 1.09 times less risky than SANOK RUBBER. It trades about 0.15 of its potential returns per unit of risk. SANOK RUBBER ZY is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 445.00 in SANOK RUBBER ZY on October 30, 2024 and sell it today you would earn a total of 63.00 from holding SANOK RUBBER ZY or generate 14.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. SANOK RUBBER ZY
Performance |
| Timeline |
| Hitachi Construction |
| SANOK RUBBER ZY |
Hitachi Construction and SANOK RUBBER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and SANOK RUBBER
The main advantage of trading using opposite Hitachi Construction and SANOK RUBBER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, SANOK RUBBER 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 SANOK RUBBER will offset losses from the drop in SANOK RUBBER'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 |
| SANOK RUBBER vs. Alliance Data Systems | SANOK RUBBER vs. MICRONIC MYDATA | SANOK RUBBER vs. Teradata Corp | SANOK RUBBER vs. INFORMATION SVC GRP |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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