Correlation Between Hitachi Construction and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and CDN IMPERIAL 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 CDN IMPERIAL 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 CDN IMPERIAL BANK, you can compare the effects of market volatilities on Hitachi Construction and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and CDN IMPERIAL.
Diversification Opportunities for Hitachi Construction and CDN IMPERIAL
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hitachi and CDN is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between Hitachi Construction and CDN IMPERIAL
Assuming the 90 days horizon Hitachi Construction is expected to generate 4.24 times less return on investment than CDN IMPERIAL. In addition to that, Hitachi Construction is 1.6 times more volatile than CDN IMPERIAL BANK. It trades about 0.02 of its total potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.11 per unit of volatility. If you would invest 3,303 in CDN IMPERIAL BANK on September 14, 2024 and sell it today you would earn a total of 3,064 from holding CDN IMPERIAL BANK or generate 92.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| Hitachi Construction |
| CDN IMPERIAL BANK |
Hitachi Construction and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and CDN IMPERIAL
The main advantage of trading using opposite Hitachi Construction and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| Hitachi Construction vs. Superior Plus Corp | Hitachi Construction vs. SIVERS SEMICONDUCTORS AB | Hitachi Construction vs. NorAm Drilling AS | Hitachi Construction vs. Norsk Hydro ASA |
| CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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