Correlation Between HUTCHISON TELECOMM and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both HUTCHISON TELECOMM and Hitachi Construction 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 HUTCHISON TELECOMM and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HUTCHISON TELECOMM and Hitachi Construction Machinery, you can compare the effects of market volatilities on HUTCHISON TELECOMM and Hitachi Construction 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 HUTCHISON TELECOMM with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUTCHISON TELECOMM and Hitachi Construction.
Diversification Opportunities for HUTCHISON TELECOMM and Hitachi Construction
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between HUTCHISON and Hitachi is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHISON TELECOMM and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and HUTCHISON TELECOMM 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 HUTCHISON TELECOMM are associated (or correlated) with Hitachi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Construction has no effect on the direction of HUTCHISON TELECOMM i.e., HUTCHISON TELECOMM and Hitachi Construction go up and down completely randomly.
Pair Corralation between HUTCHISON TELECOMM and Hitachi Construction
Assuming the 90 days trading horizon HUTCHISON TELECOMM is expected to generate 1.38 times less return on investment than Hitachi Construction. In addition to that, HUTCHISON TELECOMM is 3.59 times more volatile than Hitachi Construction Machinery. It trades about 0.06 of its total potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.3 per unit of volatility. If you would invest 2,060 in Hitachi Construction Machinery on October 29, 2024 and sell it today you would earn a total of 180.00 from holding Hitachi Construction Machinery or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HUTCHISON TELECOMM vs. Hitachi Construction Machinery
Performance |
| Timeline |
| HUTCHISON TELECOMM |
| Hitachi Construction |
HUTCHISON TELECOMM and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HUTCHISON TELECOMM and Hitachi Construction
The main advantage of trading using opposite HUTCHISON TELECOMM and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUTCHISON TELECOMM position performs unexpectedly, Hitachi Construction 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 Hitachi Construction will offset losses from the drop in Hitachi Construction's long position.| HUTCHISON TELECOMM vs. SK TELECOM TDADR | HUTCHISON TELECOMM vs. CITIC Telecom International | HUTCHISON TELECOMM vs. Ribbon Communications | HUTCHISON TELECOMM vs. COMBA TELECOM SYST |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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