Correlation Between NTG Nordic and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both NTG Nordic 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 NTG Nordic and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NTG Nordic Transport and Hitachi Construction Machinery, you can compare the effects of market volatilities on NTG Nordic 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 NTG Nordic with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and Hitachi Construction.
Diversification Opportunities for NTG Nordic and Hitachi Construction
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between NTG and Hitachi is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and NTG Nordic 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 NTG Nordic Transport 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 NTG Nordic i.e., NTG Nordic and Hitachi Construction go up and down completely randomly.
Pair Corralation between NTG Nordic and Hitachi Construction
Assuming the 90 days trading horizon NTG Nordic Transport is expected to generate 1.14 times more return on investment than Hitachi Construction. However, NTG Nordic is 1.14 times more volatile than Hitachi Construction Machinery. It trades about 0.05 of its potential returns per unit of risk. Hitachi Construction Machinery is currently generating about -0.02 per unit of risk. If you would invest 3,580 in NTG Nordic Transport on September 2, 2024 and sell it today you would earn a total of 225.00 from holding NTG Nordic Transport or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NTG Nordic Transport vs. Hitachi Construction Machinery
Performance |
| Timeline |
| NTG Nordic Transport |
| Hitachi Construction |
NTG Nordic and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NTG Nordic and Hitachi Construction
The main advantage of trading using opposite NTG Nordic and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic 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.| NTG Nordic vs. Superior Plus Corp | NTG Nordic vs. NMI Holdings | NTG Nordic vs. Origin Agritech | NTG Nordic vs. SIVERS SEMICONDUCTORS AB |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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