Correlation Between Hitachi Construction and Gencor Industries
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and Gencor Industries 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 Gencor Industries 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 Gencor Industries, you can compare the effects of market volatilities on Hitachi Construction and Gencor Industries 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 Gencor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and Gencor Industries.
Diversification Opportunities for Hitachi Construction and Gencor Industries
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hitachi and Gencor is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and Gencor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencor Industries 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 Gencor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gencor Industries has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and Gencor Industries go up and down completely randomly.
Pair Corralation between Hitachi Construction and Gencor Industries
Assuming the 90 days horizon Hitachi Construction Machinery is expected to under-perform the Gencor Industries. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hitachi Construction Machinery is 1.21 times less risky than Gencor Industries. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Gencor Industries is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,991 in Gencor Industries on August 28, 2024 and sell it today you would earn a total of 251.00 from holding Gencor Industries or generate 12.61% 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. Gencor Industries
Performance |
| Timeline |
| Hitachi Construction |
| Gencor Industries |
Hitachi Construction and Gencor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and Gencor Industries
The main advantage of trading using opposite Hitachi Construction and Gencor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, Gencor Industries 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 Gencor Industries will offset losses from the drop in Gencor Industries' long position.| Hitachi Construction vs. Lion Electric Corp | Hitachi Construction vs. Nikola Corp | Hitachi Construction vs. Buhler Industries | Hitachi Construction vs. Toyota Industries |
| Gencor Industries vs. Alamo Group | Gencor Industries vs. Manitowoc | Gencor Industries vs. Manitex International | Gencor Industries vs. Columbus McKinnon |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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