Correlation Between Hitachi Construction and Alamo
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and Alamo 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 Alamo 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 Alamo Group, you can compare the effects of market volatilities on Hitachi Construction and Alamo 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 Alamo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and Alamo.
Diversification Opportunities for Hitachi Construction and Alamo
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hitachi and Alamo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and Alamo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo 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 Alamo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamo Group has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and Alamo go up and down completely randomly.
Pair Corralation between Hitachi Construction and Alamo
Assuming the 90 days horizon Hitachi Construction Machinery is expected to under-perform the Alamo. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hitachi Construction Machinery is 1.22 times less risky than Alamo. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Alamo Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 18,129 in Alamo Group on August 28, 2024 and sell it today you would earn a total of 2,132 from holding Alamo Group or generate 11.76% 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. Alamo Group
Performance |
| Timeline |
| Hitachi Construction |
| Alamo Group |
Hitachi Construction and Alamo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and Alamo
The main advantage of trading using opposite Hitachi Construction and Alamo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, Alamo 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 Alamo will offset losses from the drop in Alamo's long position.| Hitachi Construction vs. Lion Electric Corp | Hitachi Construction vs. Nikola Corp | Hitachi Construction vs. Buhler Industries | Hitachi Construction vs. Toyota Industries |
| Alamo vs. Lion Electric Corp | Alamo vs. Xos Inc | Alamo vs. Hydrofarm Holdings Group | Alamo vs. AGCO Corporation |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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