Correlation Between Hitachi Construction and SBI Insurance
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and SBI Insurance 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 SBI Insurance 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 SBI Insurance Group, you can compare the effects of market volatilities on Hitachi Construction and SBI Insurance 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 SBI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and SBI Insurance.
Diversification Opportunities for Hitachi Construction and SBI Insurance
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hitachi and SBI is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and SBI Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Insurance Group 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 SBI Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Insurance Group has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and SBI Insurance go up and down completely randomly.
Pair Corralation between Hitachi Construction and SBI Insurance
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 1.37 times more return on investment than SBI Insurance. However, Hitachi Construction is 1.37 times more volatile than SBI Insurance Group. It trades about 0.28 of its potential returns per unit of risk. SBI Insurance Group is currently generating about 0.19 per unit of risk. If you would invest 2,080 in Hitachi Construction Machinery on November 7, 2024 and sell it today you would earn a total of 200.00 from holding Hitachi Construction Machinery or generate 9.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. SBI Insurance Group
Performance |
| Timeline |
| Hitachi Construction |
| SBI Insurance Group |
Hitachi Construction and SBI Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and SBI Insurance
The main advantage of trading using opposite Hitachi Construction and SBI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, SBI Insurance 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 SBI Insurance will offset losses from the drop in SBI Insurance's long position.| Hitachi Construction vs. VULCAN MATERIALS | Hitachi Construction vs. New Residential Investment | Hitachi Construction vs. NEWELL RUBBERMAID | Hitachi Construction vs. Goodyear Tire Rubber |
| SBI Insurance vs. Summit Hotel Properties | SBI Insurance vs. Sunstone Hotel Investors | SBI Insurance vs. Choice Hotels International | SBI Insurance vs. PPHE HOTEL GROUP |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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