Correlation Between Hitachi Construction and American Airlines
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and American Airlines 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 American Airlines 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 American Airlines Group, you can compare the effects of market volatilities on Hitachi Construction and American Airlines 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 American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and American Airlines.
Diversification Opportunities for Hitachi Construction and American Airlines
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hitachi and American is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines 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 American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and American Airlines go up and down completely randomly.
Pair Corralation between Hitachi Construction and American Airlines
Assuming the 90 days horizon Hitachi Construction Machinery is expected to under-perform the American Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Hitachi Construction Machinery is 1.87 times less risky than American Airlines. The stock trades about -0.15 of its potential returns per unit of risk. The American Airlines Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,598 in American Airlines Group on October 16, 2024 and sell it today you would earn a total of 169.00 from holding American Airlines Group or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. American Airlines Group
Performance |
| Timeline |
| Hitachi Construction |
| American Airlines |
Hitachi Construction and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and American Airlines
The main advantage of trading using opposite Hitachi Construction and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| Hitachi Construction vs. Stag Industrial | Hitachi Construction vs. GRIFFIN MINING LTD | Hitachi Construction vs. Diamyd Medical AB | Hitachi Construction vs. SERI INDUSTRIAL EO |
| American Airlines vs. NTG Nordic Transport | American Airlines vs. Transport International Holdings | American Airlines vs. SOEDER SPORTFISKE AB | American Airlines vs. ANTA SPORTS PRODUCT |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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