Correlation Between Hitachi Construction and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and QBE Insurance 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 QBE Insurance 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 QBE Insurance Group, you can compare the effects of market volatilities on Hitachi Construction and QBE Insurance 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 QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and QBE Insurance.
Diversification Opportunities for Hitachi Construction and QBE Insurance
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hitachi and QBE is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and QBE Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QBE Insurance Group 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 QBE Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QBE Insurance Group has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and QBE Insurance go up and down completely randomly.
Pair Corralation between Hitachi Construction and QBE Insurance
Assuming the 90 days horizon Hitachi Construction is expected to generate 83.74 times less return on investment than QBE Insurance. In addition to that, Hitachi Construction is 1.43 times more volatile than QBE Insurance Group. It trades about 0.0 of its total potential returns per unit of risk. QBE Insurance Group is currently generating about 0.26 per unit of volatility. If you would invest 975.00 in QBE Insurance Group on September 4, 2024 and sell it today you would earn a total of 245.00 from holding QBE Insurance Group or generate 25.13% 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. QBE Insurance Group
Performance |
| Timeline |
| Hitachi Construction |
| QBE Insurance Group |
Hitachi Construction and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and QBE Insurance
The main advantage of trading using opposite Hitachi Construction and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, QBE Insurance 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 QBE Insurance will offset losses from the drop in QBE Insurance's long position.The idea behind Hitachi Construction Machinery and QBE Insurance Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| QBE Insurance vs. Hitachi Construction Machinery | QBE Insurance vs. INDOFOOD AGRI RES | QBE Insurance vs. Lery Seafood Group | QBE Insurance vs. HF FOODS GRP |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Stocks Directory Find actively traded stocks across global markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |