Correlation Between Hitachi Construction and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and Superior Plus 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 Superior Plus 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 Superior Plus Corp, you can compare the effects of market volatilities on Hitachi Construction and Superior Plus 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 Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and Superior Plus.
Diversification Opportunities for Hitachi Construction and Superior Plus
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hitachi and Superior is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus 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 Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and Superior Plus go up and down completely randomly.
Pair Corralation between Hitachi Construction and Superior Plus
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 0.39 times more return on investment than Superior Plus. However, Hitachi Construction Machinery is 2.55 times less risky than Superior Plus. It trades about 0.17 of its potential returns per unit of risk. Superior Plus Corp is currently generating about 0.02 per unit of risk. If you would invest 1,940 in Hitachi Construction Machinery on September 1, 2024 and sell it today you would earn a total of 140.00 from holding Hitachi Construction Machinery or generate 7.22% 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. Superior Plus Corp
Performance |
| Timeline |
| Hitachi Construction |
| Superior Plus Corp |
Hitachi Construction and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and Superior Plus
The main advantage of trading using opposite Hitachi Construction and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.The idea behind Hitachi Construction Machinery and Superior Plus Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Superior Plus vs. TSOGO SUN GAMING | Superior Plus vs. FUTURE GAMING GRP | Superior Plus vs. TROPHY GAMES DEV | Superior Plus vs. Boyd Gaming |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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