Correlation Between Vestas Wind and Hirata
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Hirata 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 Vestas Wind and Hirata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestas Wind Systems and Hirata, you can compare the effects of market volatilities on Vestas Wind and Hirata 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 Vestas Wind with a short position of Hirata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Hirata.
Diversification Opportunities for Vestas Wind and Hirata
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vestas and Hirata is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Hirata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hirata and Vestas Wind 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 Vestas Wind Systems are associated (or correlated) with Hirata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hirata has no effect on the direction of Vestas Wind i.e., Vestas Wind and Hirata go up and down completely randomly.
Pair Corralation between Vestas Wind and Hirata
Assuming the 90 days trading horizon Vestas Wind Systems is expected to under-perform the Hirata. In addition to that, Vestas Wind is 1.15 times more volatile than Hirata. It trades about -0.07 of its total potential returns per unit of risk. Hirata is currently generating about -0.01 per unit of volatility. If you would invest 3,780 in Hirata on September 14, 2024 and sell it today you would lose (460.00) from holding Hirata or give up 12.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestas Wind Systems vs. Hirata
Performance |
| Timeline |
| Vestas Wind Systems |
| Hirata |
Vestas Wind and Hirata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Hirata
The main advantage of trading using opposite Vestas Wind and Hirata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Hirata 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 Hirata will offset losses from the drop in Hirata's long position.| Vestas Wind vs. Siemens Aktiengesellschaft | Vestas Wind vs. Siemens Aktiengesellschaft | Vestas Wind vs. Schneider Electric SE | Vestas Wind vs. Atlas Copco A |
| Hirata vs. SIDETRADE EO 1 | Hirata vs. FAST RETAIL ADR | Hirata vs. TRADEDOUBLER AB SK | Hirata vs. The Trade Desk |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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