Correlation Between Hitachi Construction and TFS FINANCIAL
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and TFS FINANCIAL 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 TFS FINANCIAL 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 TFS FINANCIAL, you can compare the effects of market volatilities on Hitachi Construction and TFS FINANCIAL 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 TFS FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and TFS FINANCIAL.
Diversification Opportunities for Hitachi Construction and TFS FINANCIAL
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hitachi and TFS is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and TFS FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFS FINANCIAL 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 TFS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFS FINANCIAL has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and TFS FINANCIAL go up and down completely randomly.
Pair Corralation between Hitachi Construction and TFS FINANCIAL
Assuming the 90 days horizon Hitachi Construction is expected to generate 1.29 times less return on investment than TFS FINANCIAL. In addition to that, Hitachi Construction is 1.24 times more volatile than TFS FINANCIAL. It trades about 0.02 of its total potential returns per unit of risk. TFS FINANCIAL is currently generating about 0.03 per unit of volatility. If you would invest 1,094 in TFS FINANCIAL on September 14, 2024 and sell it today you would earn a total of 176.00 from holding TFS FINANCIAL or generate 16.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. TFS FINANCIAL
Performance |
| Timeline |
| Hitachi Construction |
| TFS FINANCIAL |
Hitachi Construction and TFS FINANCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and TFS FINANCIAL
The main advantage of trading using opposite Hitachi Construction and TFS FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, TFS FINANCIAL 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 TFS FINANCIAL will offset losses from the drop in TFS FINANCIAL'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 |
| TFS FINANCIAL vs. Apple Inc | TFS FINANCIAL vs. Apple Inc | TFS FINANCIAL vs. Apple Inc | TFS FINANCIAL vs. Apple Inc |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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