Correlation Between Hitachi and Steel Partners
Can any of the company-specific risk be diversified away by investing in both Hitachi and Steel Partners 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 Steel Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hitachi and Steel Partners Holdings, you can compare the effects of market volatilities on Hitachi and Steel Partners 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 Steel Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi and Steel Partners.
Diversification Opportunities for Hitachi and Steel Partners
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hitachi and Steel is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi and Steel Partners Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Partners Holdings 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 Steel Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Partners Holdings has no effect on the direction of Hitachi i.e., Hitachi and Steel Partners go up and down completely randomly.
Pair Corralation between Hitachi and Steel Partners
Assuming the 90 days horizon Hitachi is expected to generate 1.17 times less return on investment than Steel Partners. In addition to that, Hitachi is 1.08 times more volatile than Steel Partners Holdings. It trades about 0.12 of its total potential returns per unit of risk. Steel Partners Holdings is currently generating about 0.15 per unit of volatility. If you would invest 3,997 in Steel Partners Holdings on September 1, 2024 and sell it today you would earn a total of 503.00 from holding Steel Partners Holdings or generate 12.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hitachi vs. Steel Partners Holdings
Performance |
Timeline |
Hitachi |
Steel Partners Holdings |
Hitachi and Steel Partners Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hitachi and Steel Partners
The main advantage of trading using opposite Hitachi and Steel Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi position performs unexpectedly, Steel Partners 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 Steel Partners will offset losses from the drop in Steel Partners' long position.The idea behind Hitachi and Steel Partners Holdings 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.Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Tejon Ranch 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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