Correlation Between Hitachi Construction and LANSON BCC
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and LANSON BCC 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 LANSON BCC 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 LANSON BCC INH EO, you can compare the effects of market volatilities on Hitachi Construction and LANSON BCC 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 LANSON BCC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and LANSON BCC.
Diversification Opportunities for Hitachi Construction and LANSON BCC
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hitachi and LANSON is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and LANSON BCC INH EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANSON BCC INH 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 LANSON BCC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANSON BCC INH has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and LANSON BCC go up and down completely randomly.
Pair Corralation between Hitachi Construction and LANSON BCC
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 0.72 times more return on investment than LANSON BCC. However, Hitachi Construction Machinery is 1.39 times less risky than LANSON BCC. It trades about 0.26 of its potential returns per unit of risk. LANSON BCC INH EO is currently generating about -0.2 per unit of risk. If you would invest 2,040 in Hitachi Construction Machinery on September 13, 2024 and sell it today you would earn a total of 160.00 from holding Hitachi Construction Machinery or generate 7.84% 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. LANSON BCC INH EO
Performance |
| Timeline |
| Hitachi Construction |
| LANSON BCC INH |
Hitachi Construction and LANSON BCC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and LANSON BCC
The main advantage of trading using opposite Hitachi Construction and LANSON BCC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, LANSON BCC 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 LANSON BCC will offset losses from the drop in LANSON BCC'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 |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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