Correlation Between Hitachi Construction and L3Harris Technologies
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and L3Harris Technologies 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 L3Harris Technologies 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 L3Harris Technologies, you can compare the effects of market volatilities on Hitachi Construction and L3Harris Technologies 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 L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and L3Harris Technologies.
Diversification Opportunities for Hitachi Construction and L3Harris Technologies
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hitachi and L3Harris is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies 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 L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and L3Harris Technologies go up and down completely randomly.
Pair Corralation between Hitachi Construction and L3Harris Technologies
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 1.15 times more return on investment than L3Harris Technologies. However, Hitachi Construction is 1.15 times more volatile than L3Harris Technologies. It trades about 0.16 of its potential returns per unit of risk. L3Harris Technologies is currently generating about 0.11 per unit of risk. If you would invest 2,080 in Hitachi Construction Machinery on October 25, 2024 and sell it today you would earn a total of 80.00 from holding Hitachi Construction Machinery or generate 3.85% 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. L3Harris Technologies
Performance |
| Timeline |
| Hitachi Construction |
| L3Harris Technologies |
Hitachi Construction and L3Harris Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and L3Harris Technologies
The main advantage of trading using opposite Hitachi Construction and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, L3Harris Technologies 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.| Hitachi Construction vs. TT Electronics PLC | Hitachi Construction vs. Thai Beverage Public | Hitachi Construction vs. VIRGIN WINES UK | Hitachi Construction vs. VIVA WINE GROUP |
| L3Harris Technologies vs. MTY Food Group | L3Harris Technologies vs. PLANT VEDA FOODS | L3Harris Technologies vs. Luckin Coffee | L3Harris Technologies vs. BJs Restaurants |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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