Correlation Between Hino Motors and PACCAR
Can any of the company-specific risk be diversified away by investing in both Hino Motors and PACCAR 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 Hino Motors and PACCAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hino Motors Ltd and PACCAR Inc, you can compare the effects of market volatilities on Hino Motors and PACCAR 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 Hino Motors with a short position of PACCAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hino Motors and PACCAR.
Diversification Opportunities for Hino Motors and PACCAR
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hino and PACCAR is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hino Motors Ltd and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc and Hino Motors 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 Hino Motors Ltd are associated (or correlated) with PACCAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACCAR Inc has no effect on the direction of Hino Motors i.e., Hino Motors and PACCAR go up and down completely randomly.
Pair Corralation between Hino Motors and PACCAR
Assuming the 90 days horizon Hino Motors is expected to generate 1.48 times less return on investment than PACCAR. In addition to that, Hino Motors is 1.34 times more volatile than PACCAR Inc. It trades about 0.14 of its total potential returns per unit of risk. PACCAR Inc is currently generating about 0.28 per unit of volatility. If you would invest 10,308 in PACCAR Inc on September 2, 2024 and sell it today you would earn a total of 1,392 from holding PACCAR Inc or generate 13.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hino Motors Ltd vs. PACCAR Inc
Performance |
| Timeline |
| Hino Motors |
| PACCAR Inc |
Hino Motors and PACCAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hino Motors and PACCAR
The main advantage of trading using opposite Hino Motors and PACCAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hino Motors position performs unexpectedly, PACCAR 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 PACCAR will offset losses from the drop in PACCAR's long position.| Hino Motors vs. Volkswagen AG 110 | Hino Motors vs. Stellantis NV | Hino Motors vs. Toyota Motor | Hino Motors vs. Honda Motor Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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