Correlation Between Hitachi Construction and BANK MANDIRI
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and BANK MANDIRI 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 BANK MANDIRI 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 BANK MANDIRI, you can compare the effects of market volatilities on Hitachi Construction and BANK MANDIRI 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 BANK MANDIRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and BANK MANDIRI.
Diversification Opportunities for Hitachi Construction and BANK MANDIRI
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hitachi and BANK is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI 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 BANK MANDIRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK MANDIRI has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and BANK MANDIRI go up and down completely randomly.
Pair Corralation between Hitachi Construction and BANK MANDIRI
Assuming the 90 days horizon Hitachi Construction Machinery is expected to under-perform the BANK MANDIRI. But the stock apears to be less risky and, when comparing its historical volatility, Hitachi Construction Machinery is 1.22 times less risky than BANK MANDIRI. The stock trades about -0.07 of its potential returns per unit of risk. The BANK MANDIRI is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 39.00 in BANK MANDIRI on October 12, 2024 and sell it today you would lose (7.00) from holding BANK MANDIRI or give up 17.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. BANK MANDIRI
Performance |
| Timeline |
| Hitachi Construction |
| BANK MANDIRI |
Hitachi Construction and BANK MANDIRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and BANK MANDIRI
The main advantage of trading using opposite Hitachi Construction and BANK MANDIRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, BANK MANDIRI 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 BANK MANDIRI will offset losses from the drop in BANK MANDIRI's long position.| Hitachi Construction vs. MOVIE GAMES SA | Hitachi Construction vs. 24SEVENOFFICE GROUP AB | Hitachi Construction vs. Media and Games | Hitachi Construction vs. HOCHSCHILD MINING |
| BANK MANDIRI vs. MAVEN WIRELESS SWEDEN | BANK MANDIRI vs. Hitachi Construction Machinery | BANK MANDIRI vs. North American Construction | BANK MANDIRI vs. FARM 51 GROUP |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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