Correlation Between Seadrill and Hitachi Metals
Can any of the company-specific risk be diversified away by investing in both Seadrill and Hitachi Metals 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 Seadrill and Hitachi Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seadrill Limited and Hitachi Metals, you can compare the effects of market volatilities on Seadrill and Hitachi Metals 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 Seadrill with a short position of Hitachi Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seadrill and Hitachi Metals.
Diversification Opportunities for Seadrill and Hitachi Metals
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Seadrill and Hitachi is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Seadrill Limited and Hitachi Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Metals and Seadrill 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 Seadrill Limited are associated (or correlated) with Hitachi Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Metals has no effect on the direction of Seadrill i.e., Seadrill and Hitachi Metals go up and down completely randomly.
Pair Corralation between Seadrill and Hitachi Metals
Given the investment horizon of 90 days Seadrill is expected to generate 378.47 times less return on investment than Hitachi Metals. But when comparing it to its historical volatility, Seadrill Limited is 77.31 times less risky than Hitachi Metals. It trades about 0.03 of its potential returns per unit of risk. Hitachi Metals is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 100,000,000 in Hitachi Metals on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Hitachi Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 5.86% |
| Values | Daily Returns |
Seadrill Limited vs. Hitachi Metals
Performance |
| Timeline |
| Seadrill Limited |
| Hitachi Metals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Seadrill and Hitachi Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seadrill and Hitachi Metals
The main advantage of trading using opposite Seadrill and Hitachi Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seadrill position performs unexpectedly, Hitachi Metals 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 Metals will offset losses from the drop in Hitachi Metals' long position.| Seadrill vs. Nabors Industries | Seadrill vs. Borr Drilling | Seadrill vs. Transocean | Seadrill vs. Helmerich and Payne |
| Hitachi Metals vs. SunLink Health Systems | Hitachi Metals vs. The Gap, | Hitachi Metals vs. BBB Foods | Hitachi Metals vs. Bridgford Foods |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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