Correlation Between INDUSTRIE and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both INDUSTRIE 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 INDUSTRIE and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INDUSTRIE DE NORA and Hitachi Construction Machinery, you can compare the effects of market volatilities on INDUSTRIE 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 INDUSTRIE with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDUSTRIE and Hitachi Construction.
Diversification Opportunities for INDUSTRIE and Hitachi Construction
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between INDUSTRIE and Hitachi is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding INDUSTRIE DE NORA and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and INDUSTRIE 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 INDUSTRIE DE NORA 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 INDUSTRIE i.e., INDUSTRIE and Hitachi Construction go up and down completely randomly.
Pair Corralation between INDUSTRIE and Hitachi Construction
Assuming the 90 days horizon INDUSTRIE DE NORA is expected to under-perform the Hitachi Construction. In addition to that, INDUSTRIE is 2.07 times more volatile than Hitachi Construction Machinery. It trades about -0.14 of its total potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.26 per unit of volatility. If you would invest 2,040 in Hitachi Construction Machinery on September 13, 2024 and sell it today you would earn a total of 160.00 from holding Hitachi Construction Machinery or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
INDUSTRIE DE NORA vs. Hitachi Construction Machinery
Performance |
| Timeline |
| INDUSTRIE DE NORA |
| Hitachi Construction |
INDUSTRIE and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDUSTRIE and Hitachi Construction
The main advantage of trading using opposite INDUSTRIE and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDUSTRIE 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.The idea behind INDUSTRIE DE NORA and Hitachi Construction Machinery 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.| Hitachi Construction vs. Superior Plus Corp | Hitachi Construction vs. SIVERS SEMICONDUCTORS AB | Hitachi Construction vs. NorAm Drilling AS | Hitachi Construction vs. Norsk Hydro ASA |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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