Correlation Between Merit Medical and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both Merit Medical 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 Merit Medical and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merit Medical Systems and Hitachi Construction Machinery, you can compare the effects of market volatilities on Merit Medical 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 Merit Medical with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Hitachi Construction.
Diversification Opportunities for Merit Medical and Hitachi Construction
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merit and Hitachi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and Merit Medical 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 Merit Medical Systems 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 Merit Medical i.e., Merit Medical and Hitachi Construction go up and down completely randomly.
Pair Corralation between Merit Medical and Hitachi Construction
Assuming the 90 days trading horizon Merit Medical Systems is expected to under-perform the Hitachi Construction. But the stock apears to be less risky and, when comparing its historical volatility, Merit Medical Systems is 1.29 times less risky than Hitachi Construction. The stock trades about -0.32 of its potential returns per unit of risk. The Hitachi Construction Machinery is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 2,200 in Hitachi Construction Machinery on October 11, 2024 and sell it today you would lose (100.00) from holding Hitachi Construction Machinery or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Merit Medical Systems vs. Hitachi Construction Machinery
Performance |
| Timeline |
| Merit Medical Systems |
| Hitachi Construction |
Merit Medical and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Hitachi Construction
The main advantage of trading using opposite Merit Medical and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical 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.| Merit Medical vs. Townsquare Media | Merit Medical vs. Luckin Coffee | Merit Medical vs. Seven West Media | Merit Medical vs. PARKEN Sport Entertainment |
| Hitachi Construction vs. MOVIE GAMES SA | Hitachi Construction vs. 24SEVENOFFICE GROUP AB | Hitachi Construction vs. Media and Games | Hitachi Construction vs. HOCHSCHILD MINING |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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