Correlation Between Hitachi Construction and Lenox Pasifik
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and Lenox Pasifik 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 Lenox Pasifik 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 Lenox Pasifik Investama, you can compare the effects of market volatilities on Hitachi Construction and Lenox Pasifik 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 Lenox Pasifik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and Lenox Pasifik.
Diversification Opportunities for Hitachi Construction and Lenox Pasifik
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hitachi and Lenox is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and Lenox Pasifik Investama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenox Pasifik Investama 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 Lenox Pasifik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenox Pasifik Investama has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and Lenox Pasifik go up and down completely randomly.
Pair Corralation between Hitachi Construction and Lenox Pasifik
Assuming the 90 days horizon Hitachi Construction is expected to generate 14.67 times less return on investment than Lenox Pasifik. But when comparing it to its historical volatility, Hitachi Construction Machinery is 6.55 times less risky than Lenox Pasifik. It trades about 0.02 of its potential returns per unit of risk. Lenox Pasifik Investama is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.25 in Lenox Pasifik Investama on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Lenox Pasifik Investama or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. Lenox Pasifik Investama
Performance |
| Timeline |
| Hitachi Construction |
| Lenox Pasifik Investama |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Hitachi Construction and Lenox Pasifik Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and Lenox Pasifik
The main advantage of trading using opposite Hitachi Construction and Lenox Pasifik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, Lenox Pasifik 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 Lenox Pasifik will offset losses from the drop in Lenox Pasifik'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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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