Correlation Between Hitachi Construction and Lindsay
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and Lindsay 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 Lindsay 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 Lindsay, you can compare the effects of market volatilities on Hitachi Construction and Lindsay 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 Lindsay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and Lindsay.
Diversification Opportunities for Hitachi Construction and Lindsay
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hitachi and Lindsay is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and Lindsay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsay 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 Lindsay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsay has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and Lindsay go up and down completely randomly.
Pair Corralation between Hitachi Construction and Lindsay
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 1.0 times more return on investment than Lindsay. However, Hitachi Construction Machinery is 1.0 times less risky than Lindsay. It trades about 0.02 of its potential returns per unit of risk. Lindsay is currently generating about -0.01 per unit of risk. If you would invest 4,090 in Hitachi Construction Machinery on August 27, 2024 and sell it today you would earn a total of 240.00 from holding Hitachi Construction Machinery or generate 5.87% 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. Lindsay
Performance |
| Timeline |
| Hitachi Construction |
| Lindsay |
Hitachi Construction and Lindsay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and Lindsay
The main advantage of trading using opposite Hitachi Construction and Lindsay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, Lindsay 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 Lindsay will offset losses from the drop in Lindsay's long position.| Hitachi Construction vs. Lion Electric Corp | Hitachi Construction vs. Nikola Corp | Hitachi Construction vs. Buhler Industries | Hitachi Construction vs. Toyota Industries |
| Lindsay vs. Columbus McKinnon | Lindsay vs. Astec Industries | Lindsay vs. Shyft Group | Lindsay 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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