Correlation Between Seaboard and Hitachi
Can any of the company-specific risk be diversified away by investing in both Seaboard 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 Seaboard and Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seaboard and Hitachi, you can compare the effects of market volatilities on Seaboard 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 Seaboard with a short position of Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seaboard and Hitachi.
Diversification Opportunities for Seaboard and Hitachi
Good diversification
The 3 months correlation between Seaboard and Hitachi is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Seaboard and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi and Seaboard 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 Seaboard 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 Seaboard i.e., Seaboard and Hitachi go up and down completely randomly.
Pair Corralation between Seaboard and Hitachi
Considering the 90-day investment horizon Seaboard is expected to under-perform the Hitachi. But the stock apears to be less risky and, when comparing its historical volatility, Seaboard is 57.85 times less risky than Hitachi. The stock trades about -0.05 of its potential returns per unit of risk. The Hitachi is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,002 in Hitachi on August 27, 2024 and sell it today you would earn a total of 1,576 from holding Hitachi or generate 157.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.98% |
| Values | Daily Returns |
Seaboard vs. Hitachi
Performance |
| Timeline |
| Seaboard |
| Hitachi |
Seaboard and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seaboard and Hitachi
The main advantage of trading using opposite Seaboard and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seaboard 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.| Seaboard vs. White Mountains Insurance | Seaboard vs. Cable One | Seaboard vs. NVR Inc | Seaboard vs. Alexanders |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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