Correlation Between Hitachi Construction and Karoon Energy
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and Karoon Energy 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 Karoon Energy 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 Karoon Energy, you can compare the effects of market volatilities on Hitachi Construction and Karoon Energy 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 Karoon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and Karoon Energy.
Diversification Opportunities for Hitachi Construction and Karoon Energy
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hitachi and Karoon is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and Karoon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karoon Energy 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 Karoon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karoon Energy has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and Karoon Energy go up and down completely randomly.
Pair Corralation between Hitachi Construction and Karoon Energy
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 0.73 times more return on investment than Karoon Energy. However, Hitachi Construction Machinery is 1.38 times less risky than Karoon Energy. It trades about 0.02 of its potential returns per unit of risk. Karoon Energy is currently generating about -0.02 per unit of risk. If you would invest 2,060 in Hitachi Construction Machinery on September 14, 2024 and sell it today you would earn a total of 140.00 from holding Hitachi Construction Machinery or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. Karoon Energy
Performance |
| Timeline |
| Hitachi Construction |
| Karoon Energy |
Hitachi Construction and Karoon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and Karoon Energy
The main advantage of trading using opposite Hitachi Construction and Karoon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, Karoon Energy 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 Karoon Energy will offset losses from the drop in Karoon Energy'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 |
| Karoon Energy vs. Hitachi Construction Machinery | Karoon Energy vs. Clean Energy Fuels | Karoon Energy vs. TITAN MACHINERY | Karoon Energy vs. Daito Trust Construction |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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