Correlation Between Hitachi Construction and NISSAN CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and NISSAN CHEMICAL 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 NISSAN CHEMICAL 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 NISSAN CHEMICAL IND, you can compare the effects of market volatilities on Hitachi Construction and NISSAN CHEMICAL 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 NISSAN CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and NISSAN CHEMICAL.
Diversification Opportunities for Hitachi Construction and NISSAN CHEMICAL
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hitachi and NISSAN is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and NISSAN CHEMICAL IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSAN CHEMICAL IND 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 NISSAN CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSAN CHEMICAL IND has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and NISSAN CHEMICAL go up and down completely randomly.
Pair Corralation between Hitachi Construction and NISSAN CHEMICAL
Assuming the 90 days horizon Hitachi Construction is expected to generate 1.45 times less return on investment than NISSAN CHEMICAL. In addition to that, Hitachi Construction is 2.22 times more volatile than NISSAN CHEMICAL IND. It trades about 0.1 of its total potential returns per unit of risk. NISSAN CHEMICAL IND is currently generating about 0.33 per unit of volatility. If you would invest 3,100 in NISSAN CHEMICAL IND on August 28, 2024 and sell it today you would earn a total of 240.00 from holding NISSAN CHEMICAL IND or generate 7.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. NISSAN CHEMICAL IND
Performance |
| Timeline |
| Hitachi Construction |
| NISSAN CHEMICAL IND |
Hitachi Construction and NISSAN CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and NISSAN CHEMICAL
The main advantage of trading using opposite Hitachi Construction and NISSAN CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, NISSAN CHEMICAL 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 NISSAN CHEMICAL will offset losses from the drop in NISSAN CHEMICAL's long position.| Hitachi Construction vs. Superior Plus Corp | Hitachi Construction vs. NMI Holdings | Hitachi Construction vs. Origin Agritech | Hitachi Construction vs. SIVERS SEMICONDUCTORS AB |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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