Correlation Between Volkswagen and Hino Motors
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Hino Motors 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 Volkswagen and Hino Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG 110 and Hino Motors Ltd, you can compare the effects of market volatilities on Volkswagen and Hino Motors 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 Volkswagen with a short position of Hino Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Hino Motors.
Diversification Opportunities for Volkswagen and Hino Motors
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Volkswagen and Hino is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG 110 and Hino Motors Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hino Motors and Volkswagen 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 Volkswagen AG 110 are associated (or correlated) with Hino Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hino Motors has no effect on the direction of Volkswagen i.e., Volkswagen and Hino Motors go up and down completely randomly.
Pair Corralation between Volkswagen and Hino Motors
Assuming the 90 days horizon Volkswagen AG 110 is expected to under-perform the Hino Motors. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG 110 is 1.52 times less risky than Hino Motors. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Hino Motors Ltd is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,840 in Hino Motors Ltd on September 2, 2024 and sell it today you would lose (240.00) from holding Hino Motors Ltd or give up 8.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG 110 vs. Hino Motors Ltd
Performance |
| Timeline |
| Volkswagen AG 110 |
| Hino Motors |
Volkswagen and Hino Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Hino Motors
The main advantage of trading using opposite Volkswagen and Hino Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Hino Motors 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 Hino Motors will offset losses from the drop in Hino Motors' long position.| Volkswagen vs. Porsche Automobile Holding | Volkswagen vs. Bayerische Motoren Werke | Volkswagen vs. Volkswagen AG | Volkswagen vs. Mercedes Benz Group AG |
| Hino Motors vs. Volkswagen AG 110 | Hino Motors vs. Stellantis NV | Hino Motors vs. Toyota Motor | Hino Motors vs. Honda Motor Co |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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