Correlation Between Hitachi and National Health
Can any of the company-specific risk be diversified away by investing in both Hitachi and National Health 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 National Health 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 National Health Scan, you can compare the effects of market volatilities on Hitachi and National Health 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 National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi and National Health.
Diversification Opportunities for Hitachi and National Health
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hitachi and National is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Ltd ADR and National Health Scan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Scan 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Scan has no effect on the direction of Hitachi i.e., Hitachi and National Health go up and down completely randomly.
Pair Corralation between Hitachi and National Health
Assuming the 90 days horizon Hitachi Ltd ADR is expected to generate 0.2 times more return on investment than National Health. However, Hitachi Ltd ADR is 4.88 times less risky than National Health. It trades about 0.11 of its potential returns per unit of risk. National Health Scan is currently generating about -0.15 per unit of risk. If you would invest 5,130 in Hitachi Ltd ADR on September 13, 2024 and sell it today you would earn a total of 229.00 from holding Hitachi Ltd ADR or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Ltd ADR vs. National Health Scan
Performance |
| Timeline |
| Hitachi Ltd ADR |
| National Health Scan |
Hitachi and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi and National Health
The main advantage of trading using opposite Hitachi and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi position performs unexpectedly, National Health 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 National Health will offset losses from the drop in National Health's long position.| Hitachi vs. Teijin | Hitachi vs. Jardine Matheson Holdings | Hitachi vs. Marubeni Corp ADR | Hitachi vs. Mitsubishi Corp |
| National Health vs. Arca Continental SAB | National Health vs. Becle SA de | National Health vs. Aquagold International | National Health vs. Morningstar Unconstrained Allocation |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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