Correlation Between Hitachi Construction and ALGOMA STEEL
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and ALGOMA STEEL 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 ALGOMA STEEL 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 ALGOMA STEEL GROUP, you can compare the effects of market volatilities on Hitachi Construction and ALGOMA STEEL 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 ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and ALGOMA STEEL.
Diversification Opportunities for Hitachi Construction and ALGOMA STEEL
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hitachi and ALGOMA is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and ALGOMA STEEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALGOMA STEEL GROUP 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 ALGOMA STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALGOMA STEEL GROUP has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and ALGOMA STEEL go up and down completely randomly.
Pair Corralation between Hitachi Construction and ALGOMA STEEL
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 0.5 times more return on investment than ALGOMA STEEL. However, Hitachi Construction Machinery is 2.01 times less risky than ALGOMA STEEL. It trades about -0.17 of its potential returns per unit of risk. ALGOMA STEEL GROUP is currently generating about -0.25 per unit of risk. If you would invest 2,200 in Hitachi Construction Machinery on October 11, 2024 and sell it today you would lose (100.00) from holding Hitachi Construction Machinery or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. ALGOMA STEEL GROUP
Performance |
| Timeline |
| Hitachi Construction |
| ALGOMA STEEL GROUP |
Hitachi Construction and ALGOMA STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and ALGOMA STEEL
The main advantage of trading using opposite Hitachi Construction and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, ALGOMA STEEL 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 ALGOMA STEEL will offset losses from the drop in ALGOMA STEEL's long position.| Hitachi Construction vs. MOVIE GAMES SA | Hitachi Construction vs. 24SEVENOFFICE GROUP AB | Hitachi Construction vs. Media and Games | Hitachi Construction vs. HOCHSCHILD MINING |
| ALGOMA STEEL vs. BANK OF CHINA | ALGOMA STEEL vs. Dairy Farm International | ALGOMA STEEL vs. Hitachi Construction Machinery | ALGOMA STEEL vs. Synchrony Financial |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |