Correlation Between Hitachi and Grupo Carso
Can any of the company-specific risk be diversified away by investing in both Hitachi and Grupo Carso 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 and Grupo Carso into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hitachi and Grupo Carso SAB, you can compare the effects of market volatilities on Hitachi and Grupo Carso 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 with a short position of Grupo Carso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi and Grupo Carso.
Diversification Opportunities for Hitachi and Grupo Carso
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hitachi and Grupo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB and Hitachi 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 are associated (or correlated) with Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of Hitachi i.e., Hitachi and Grupo Carso go up and down completely randomly.
Pair Corralation between Hitachi and Grupo Carso
Assuming the 90 days trading horizon Hitachi is expected to generate 1.03 times more return on investment than Grupo Carso. However, Hitachi is 1.03 times more volatile than Grupo Carso SAB. It trades about 0.14 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about 0.07 per unit of risk. If you would invest 2,046 in Hitachi on September 4, 2024 and sell it today you would earn a total of 494.00 from holding Hitachi or generate 24.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Hitachi vs. Grupo Carso SAB
Performance |
| Timeline |
| Hitachi |
| Grupo Carso SAB |
Hitachi and Grupo Carso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi and Grupo Carso
The main advantage of trading using opposite Hitachi and Grupo Carso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi position performs unexpectedly, Grupo Carso 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 Grupo Carso will offset losses from the drop in Grupo Carso's long position.| Hitachi vs. Honeywell International | Hitachi vs. CITIC Limited | Hitachi vs. CK HUTCHISON HLDGS | Hitachi vs. Marubeni |
| Grupo Carso vs. Honeywell International | Grupo Carso vs. CITIC Limited | Grupo Carso vs. CK HUTCHISON HLDGS | Grupo Carso vs. Marubeni |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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