Correlation Between Hitachi Construction and Strategic Investments
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and Strategic Investments 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 Strategic Investments 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 Strategic Investments AS, you can compare the effects of market volatilities on Hitachi Construction and Strategic Investments 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 Strategic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and Strategic Investments.
Diversification Opportunities for Hitachi Construction and Strategic Investments
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hitachi and Strategic is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments 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 Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and Strategic Investments go up and down completely randomly.
Pair Corralation between Hitachi Construction and Strategic Investments
Assuming the 90 days horizon Hitachi Construction Machinery is expected to under-perform the Strategic Investments. But the stock apears to be less risky and, when comparing its historical volatility, Hitachi Construction Machinery is 2.46 times less risky than Strategic Investments. The stock trades about -0.03 of its potential returns per unit of risk. The Strategic Investments AS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Strategic Investments AS on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Strategic Investments AS or generate 0.0% 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. Strategic Investments AS
Performance |
| Timeline |
| Hitachi Construction |
| Strategic Investments |
Hitachi Construction and Strategic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and Strategic Investments
The main advantage of trading using opposite Hitachi Construction and Strategic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, Strategic Investments 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 Strategic Investments will offset losses from the drop in Strategic Investments' long position.| Hitachi Construction vs. Superior Plus Corp | Hitachi Construction vs. NMI Holdings | Hitachi Construction vs. Origin Agritech | Hitachi Construction vs. SIVERS SEMICONDUCTORS AB |
| Strategic Investments vs. The Bank of | Strategic Investments vs. Superior Plus Corp | Strategic Investments vs. NMI Holdings | Strategic Investments vs. Origin Agritech |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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