Correlation Between Hitachi and Agro Capital
Can any of the company-specific risk be diversified away by investing in both Hitachi and Agro Capital 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 Agro Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hitachi and Agro Capital Management, you can compare the effects of market volatilities on Hitachi and Agro Capital 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 Agro Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi and Agro Capital.
Diversification Opportunities for Hitachi and Agro Capital
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hitachi and Agro is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi and Agro Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agro Capital Management 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 Agro Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agro Capital Management has no effect on the direction of Hitachi i.e., Hitachi and Agro Capital go up and down completely randomly.
Pair Corralation between Hitachi and Agro Capital
Assuming the 90 days horizon Hitachi is expected to generate 7.94 times less return on investment than Agro Capital. But when comparing it to its historical volatility, Hitachi is 7.24 times less risky than Agro Capital. It trades about 0.08 of its potential returns per unit of risk. Agro Capital Management is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.10 in Agro Capital Management on November 27, 2024 and sell it today you would earn a total of 3.67 from holding Agro Capital Management or generate 333.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.93% |
| Values | Daily Returns |
Hitachi vs. Agro Capital Management
Performance |
| Timeline |
| Hitachi |
| Agro Capital Management |
Hitachi and Agro Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi and Agro Capital
The main advantage of trading using opposite Hitachi and Agro Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi position performs unexpectedly, Agro Capital 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 Agro Capital will offset losses from the drop in Agro Capital's long position.The idea behind Hitachi and Agro Capital Management pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Agro Capital vs. Alliance Recovery | Agro Capital vs. Ayala | Agro Capital vs. Alaska Power Telephone | Agro Capital vs. Ayala Corp ADR |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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