Correlation Between Hitachi Construction and GOLD ROAD
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and GOLD ROAD 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 GOLD ROAD 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 GOLD ROAD RES, you can compare the effects of market volatilities on Hitachi Construction and GOLD ROAD 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 GOLD ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and GOLD ROAD.
Diversification Opportunities for Hitachi Construction and GOLD ROAD
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hitachi and GOLD is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES 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 GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and GOLD ROAD go up and down completely randomly.
Pair Corralation between Hitachi Construction and GOLD ROAD
Assuming the 90 days horizon Hitachi Construction is expected to generate 2.45 times less return on investment than GOLD ROAD. But when comparing it to its historical volatility, Hitachi Construction Machinery is 1.46 times less risky than GOLD ROAD. It trades about 0.01 of its potential returns per unit of risk. GOLD ROAD RES is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 113.00 in GOLD ROAD RES on October 7, 2024 and sell it today you would earn a total of 12.00 from holding GOLD ROAD RES or generate 10.62% 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. GOLD ROAD RES
Performance |
| Timeline |
| Hitachi Construction |
| GOLD ROAD RES |
Hitachi Construction and GOLD ROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and GOLD ROAD
The main advantage of trading using opposite Hitachi Construction and GOLD ROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, GOLD ROAD 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 GOLD ROAD will offset losses from the drop in GOLD ROAD's long position.| Hitachi Construction vs. Superior Plus Corp | Hitachi Construction vs. NMI Holdings | Hitachi Construction vs. SIVERS SEMICONDUCTORS AB | Hitachi Construction vs. Talanx AG |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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