Correlation Between ITALIAN WINE and Hitachi
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE and Hitachi 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 ITALIAN WINE and Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and Hitachi, you can compare the effects of market volatilities on ITALIAN WINE and Hitachi 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 ITALIAN WINE with a short position of Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and Hitachi.
Diversification Opportunities for ITALIAN WINE and Hitachi
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ITALIAN and Hitachi is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi and ITALIAN WINE 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 ITALIAN WINE BRANDS are associated (or correlated) with Hitachi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi has no effect on the direction of ITALIAN WINE i.e., ITALIAN WINE and Hitachi go up and down completely randomly.
Pair Corralation between ITALIAN WINE and Hitachi
Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to under-perform the Hitachi. But the stock apears to be less risky and, when comparing its historical volatility, ITALIAN WINE BRANDS is 1.73 times less risky than Hitachi. The stock trades about -0.02 of its potential returns per unit of risk. The Hitachi is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,247 in Hitachi on September 5, 2024 and sell it today you would earn a total of 293.00 from holding Hitachi or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. Hitachi
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| Hitachi |
ITALIAN WINE and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and Hitachi
The main advantage of trading using opposite ITALIAN WINE and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE position performs unexpectedly, Hitachi 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 will offset losses from the drop in Hitachi's long position.| ITALIAN WINE vs. CHINA TONTINE WINES | ITALIAN WINE vs. Superior Plus Corp | ITALIAN WINE vs. NMI Holdings | ITALIAN WINE vs. Origin Agritech |
| Hitachi vs. GALENA MINING LTD | Hitachi vs. Caltagirone SpA | Hitachi vs. ITALIAN WINE BRANDS | Hitachi vs. Nippon Steel |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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