Correlation Between Hitachi Construction and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and NMI Holdings 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 NMI Holdings 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 NMI Holdings, you can compare the effects of market volatilities on Hitachi Construction and NMI Holdings 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 NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and NMI Holdings.
Diversification Opportunities for Hitachi Construction and NMI Holdings
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hitachi and NMI is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings 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 NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and NMI Holdings go up and down completely randomly.
Pair Corralation between Hitachi Construction and NMI Holdings
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 0.97 times more return on investment than NMI Holdings. However, Hitachi Construction Machinery is 1.03 times less risky than NMI Holdings. It trades about 0.1 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.04 per unit of risk. If you would invest 1,970 in Hitachi Construction Machinery on August 28, 2024 and sell it today you would earn a total of 90.00 from holding Hitachi Construction Machinery or generate 4.57% 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. NMI Holdings
Performance |
| Timeline |
| Hitachi Construction |
| NMI Holdings |
Hitachi Construction and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and NMI Holdings
The main advantage of trading using opposite Hitachi Construction and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, NMI Holdings 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 NMI Holdings will offset losses from the drop in NMI Holdings' long position.| Hitachi Construction vs. Superior Plus Corp | Hitachi Construction vs. NMI Holdings | Hitachi Construction vs. Origin Agritech | Hitachi Construction vs. SIVERS SEMICONDUCTORS AB |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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