Correlation Between Hitachi Construction and AGCO
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and AGCO 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 AGCO 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 AGCO Corporation, you can compare the effects of market volatilities on Hitachi Construction and AGCO 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 AGCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and AGCO.
Diversification Opportunities for Hitachi Construction and AGCO
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hitachi and AGCO is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and AGCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGCO 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 AGCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGCO has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and AGCO go up and down completely randomly.
Pair Corralation between Hitachi Construction and AGCO
Assuming the 90 days horizon Hitachi Construction Machinery is expected to under-perform the AGCO. But the stock apears to be less risky and, when comparing its historical volatility, Hitachi Construction Machinery is 1.01 times less risky than AGCO. The stock trades about -0.06 of its potential returns per unit of risk. The AGCO Corporation is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 10,241 in AGCO Corporation on September 3, 2024 and sell it today you would lose (521.00) from holding AGCO Corporation or give up 5.09% 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. AGCO Corp.
Performance |
| Timeline |
| Hitachi Construction |
| AGCO |
Hitachi Construction and AGCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and AGCO
The main advantage of trading using opposite Hitachi Construction and AGCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, AGCO 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 AGCO will offset losses from the drop in AGCO's long position.| Hitachi Construction vs. REVO INSURANCE SPA | Hitachi Construction vs. TFS FINANCIAL | Hitachi Construction vs. Cars Inc | Hitachi Construction vs. Geely Automobile Holdings |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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