Correlation Between Hitachi Construction and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and USWE SPORTS 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 USWE SPORTS 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 USWE SPORTS AB, you can compare the effects of market volatilities on Hitachi Construction and USWE SPORTS 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 USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and USWE SPORTS.
Diversification Opportunities for Hitachi Construction and USWE SPORTS
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hitachi and USWE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB 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 USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and USWE SPORTS go up and down completely randomly.
Pair Corralation between Hitachi Construction and USWE SPORTS
Assuming the 90 days horizon Hitachi Construction is expected to generate 1.39 times less return on investment than USWE SPORTS. But when comparing it to its historical volatility, Hitachi Construction Machinery is 1.59 times less risky than USWE SPORTS. It trades about 0.35 of its potential returns per unit of risk. USWE SPORTS AB is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 74.00 in USWE SPORTS AB on October 30, 2024 and sell it today you would earn a total of 11.00 from holding USWE SPORTS AB or generate 14.86% 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. USWE SPORTS AB
Performance |
| Timeline |
| Hitachi Construction |
| USWE SPORTS AB |
Hitachi Construction and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and USWE SPORTS
The main advantage of trading using opposite Hitachi Construction and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS'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 |
| USWE SPORTS vs. GAMESTOP | USWE SPORTS vs. Media and Games | USWE SPORTS vs. Boyd Gaming | USWE SPORTS vs. PARKEN Sport Entertainment |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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