Correlation Between Hitachi Construction and CITIC Telecom
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and CITIC Telecom 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 CITIC Telecom 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 CITIC Telecom International, you can compare the effects of market volatilities on Hitachi Construction and CITIC Telecom 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 CITIC Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and CITIC Telecom.
Diversification Opportunities for Hitachi Construction and CITIC Telecom
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hitachi and CITIC is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and CITIC Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Telecom Intern 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 CITIC Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Telecom Intern has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and CITIC Telecom go up and down completely randomly.
Pair Corralation between Hitachi Construction and CITIC Telecom
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 0.62 times more return on investment than CITIC Telecom. However, Hitachi Construction Machinery is 1.62 times less risky than CITIC Telecom. It trades about 0.3 of its potential returns per unit of risk. CITIC Telecom International is currently generating about 0.01 per unit of risk. If you would invest 2,040 in Hitachi Construction Machinery on October 22, 2024 and sell it today you would earn a total of 120.00 from holding Hitachi Construction Machinery or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. CITIC Telecom International
Performance |
| Timeline |
| Hitachi Construction |
| CITIC Telecom Intern |
Hitachi Construction and CITIC Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and CITIC Telecom
The main advantage of trading using opposite Hitachi Construction and CITIC Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, CITIC Telecom 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 CITIC Telecom will offset losses from the drop in CITIC Telecom's long position.| Hitachi Construction vs. Samsung Electronics Co | Hitachi Construction vs. AOI Electronics Co | Hitachi Construction vs. Siamgas And Petrochemicals | Hitachi Construction vs. Silicon Motion Technology |
| CITIC Telecom vs. Hitachi Construction Machinery | CITIC Telecom vs. Granite Construction | CITIC Telecom vs. PT Steel Pipe | CITIC Telecom vs. CanSino Biologics |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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