Correlation Between Hitachi and Fosun International
Can any of the company-specific risk be diversified away by investing in both Hitachi and Fosun International 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 Fosun International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hitachi Ltd ADR and Fosun International, you can compare the effects of market volatilities on Hitachi and Fosun International 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 Fosun International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi and Fosun International.
Diversification Opportunities for Hitachi and Fosun International
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hitachi and Fosun is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Ltd ADR and Fosun International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fosun International 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 Ltd ADR are associated (or correlated) with Fosun International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fosun International has no effect on the direction of Hitachi i.e., Hitachi and Fosun International go up and down completely randomly.
Pair Corralation between Hitachi and Fosun International
Assuming the 90 days horizon Hitachi Ltd ADR is expected to generate 0.41 times more return on investment than Fosun International. However, Hitachi Ltd ADR is 2.43 times less risky than Fosun International. It trades about 0.11 of its potential returns per unit of risk. Fosun International is currently generating about 0.03 per unit of risk. If you would invest 2,712 in Hitachi Ltd ADR on September 3, 2024 and sell it today you would earn a total of 2,316 from holding Hitachi Ltd ADR or generate 85.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 55.47% |
| Values | Daily Returns |
Hitachi Ltd ADR vs. Fosun International
Performance |
| Timeline |
| Hitachi Ltd ADR |
| Fosun International |
Hitachi and Fosun International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi and Fosun International
The main advantage of trading using opposite Hitachi and Fosun International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi position performs unexpectedly, Fosun International 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 Fosun International will offset losses from the drop in Fosun International's long position.| Hitachi vs. Teijin | Hitachi vs. Jardine Matheson Holdings | Hitachi vs. Marubeni Corp ADR | Hitachi vs. Mitsubishi Corp |
| Fosun International vs. Grupo Bimbo SAB | Fosun International vs. Grupo Financiero Inbursa | Fosun International vs. Becle SA de | Fosun International vs. HUMANA INC |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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