Correlation Between NN and Hitachi
Can any of the company-specific risk be diversified away by investing in both NN 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 NN and Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NN Inc and Hitachi Ltd ADR, you can compare the effects of market volatilities on NN 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 NN with a short position of Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of NN and Hitachi.
Diversification Opportunities for NN and Hitachi
Very weak diversification
The 3 months correlation between NN and Hitachi is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NN Inc and Hitachi Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Ltd ADR and NN 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 NN Inc 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 Ltd ADR has no effect on the direction of NN i.e., NN and Hitachi go up and down completely randomly.
Pair Corralation between NN and Hitachi
Given the investment horizon of 90 days NN Inc is expected to generate 1.6 times more return on investment than Hitachi. However, NN is 1.6 times more volatile than Hitachi Ltd ADR. It trades about 0.02 of its potential returns per unit of risk. Hitachi Ltd ADR is currently generating about 0.02 per unit of risk. If you would invest 397.00 in NN Inc on September 13, 2024 and sell it today you would earn a total of 0.00 from holding NN Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
NN Inc vs. Hitachi Ltd ADR
Performance |
| Timeline |
| NN Inc |
| Hitachi Ltd ADR |
NN and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NN and Hitachi
The main advantage of trading using opposite NN and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NN 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.| NN vs. Steel Partners Holdings | NN vs. Compass Diversified | NN vs. Brookfield Business Partners | NN vs. Matthews International |
| Hitachi vs. Teijin | Hitachi vs. Jardine Matheson Holdings | Hitachi vs. Marubeni Corp ADR | Hitachi vs. Mitsubishi Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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