Correlation Between Hitachi Construction and LTC Properties
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and LTC Properties 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 LTC Properties 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 LTC Properties, you can compare the effects of market volatilities on Hitachi Construction and LTC Properties 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 LTC Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and LTC Properties.
Diversification Opportunities for Hitachi Construction and LTC Properties
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hitachi and LTC is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and LTC Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LTC Properties 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 LTC Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LTC Properties has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and LTC Properties go up and down completely randomly.
Pair Corralation between Hitachi Construction and LTC Properties
Assuming the 90 days horizon Hitachi Construction Machinery is expected to under-perform the LTC Properties. In addition to that, Hitachi Construction is 1.57 times more volatile than LTC Properties. It trades about -0.01 of its total potential returns per unit of risk. LTC Properties is currently generating about 0.06 per unit of volatility. If you would invest 2,752 in LTC Properties on September 12, 2024 and sell it today you would earn a total of 810.00 from holding LTC Properties or generate 29.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. LTC Properties
Performance |
| Timeline |
| Hitachi Construction |
| LTC Properties |
Hitachi Construction and LTC Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and LTC Properties
The main advantage of trading using opposite Hitachi Construction and LTC Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, LTC Properties 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 LTC Properties will offset losses from the drop in LTC Properties' 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 |
| LTC Properties vs. GLG LIFE TECH | LTC Properties vs. Global Ship Lease | LTC Properties vs. Motorcar Parts of | LTC Properties vs. CarsalesCom |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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