Correlation Between Hitachi Construction and Salzgitter
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and Salzgitter 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 Salzgitter 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 Salzgitter AG, you can compare the effects of market volatilities on Hitachi Construction and Salzgitter 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 Salzgitter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and Salzgitter.
Diversification Opportunities for Hitachi Construction and Salzgitter
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hitachi and Salzgitter is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and Salzgitter AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salzgitter AG 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 Salzgitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salzgitter AG has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and Salzgitter go up and down completely randomly.
Pair Corralation between Hitachi Construction and Salzgitter
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 0.66 times more return on investment than Salzgitter. However, Hitachi Construction Machinery is 1.51 times less risky than Salzgitter. It trades about 0.02 of its potential returns per unit of risk. Salzgitter AG is currently generating about -0.02 per unit of risk. If you would invest 2,060 in Hitachi Construction Machinery on September 14, 2024 and sell it today you would earn a total of 140.00 from holding Hitachi Construction Machinery or generate 6.8% 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. Salzgitter AG
Performance |
| Timeline |
| Hitachi Construction |
| Salzgitter AG |
Hitachi Construction and Salzgitter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and Salzgitter
The main advantage of trading using opposite Hitachi Construction and Salzgitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, Salzgitter 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 Salzgitter will offset losses from the drop in Salzgitter'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 |
| Salzgitter vs. United Breweries Co | Salzgitter vs. ScanSource | Salzgitter vs. Hitachi Construction Machinery | Salzgitter vs. AGRICULTBK HADR25 YC |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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