Correlation Between Volvo AB and Hitachi
Can any of the company-specific risk be diversified away by investing in both Volvo AB 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 Volvo AB and Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volvo AB ser and Hitachi, you can compare the effects of market volatilities on Volvo AB 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 Volvo AB with a short position of Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volvo AB and Hitachi.
Diversification Opportunities for Volvo AB and Hitachi
Weak diversification
The 3 months correlation between Volvo and Hitachi is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Volvo AB ser and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi and Volvo AB 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 Volvo AB ser 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 Volvo AB i.e., Volvo AB and Hitachi go up and down completely randomly.
Pair Corralation between Volvo AB and Hitachi
Assuming the 90 days horizon Volvo AB ser is expected to under-perform the Hitachi. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volvo AB ser is 2.02 times less risky than Hitachi. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Hitachi is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,530 in Hitachi on August 30, 2024 and sell it today you would lose (129.00) from holding Hitachi or give up 5.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volvo AB ser vs. Hitachi
Performance |
| Timeline |
| Volvo AB ser |
| Hitachi |
Volvo AB and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volvo AB and Hitachi
The main advantage of trading using opposite Volvo AB and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volvo AB 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.| Volvo AB vs. Buhler Industries | Volvo AB vs. Ag Growth International | Volvo AB vs. Grow Solutions Holdings | Volvo AB vs. American Premium Water |
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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