Correlation Between CHINA TELECOM and Hitachi
Can any of the company-specific risk be diversified away by investing in both CHINA TELECOM 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 CHINA TELECOM and Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA TELECOM H and Hitachi, you can compare the effects of market volatilities on CHINA TELECOM 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 CHINA TELECOM with a short position of Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TELECOM and Hitachi.
Diversification Opportunities for CHINA TELECOM and Hitachi
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CHINA and Hitachi is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TELECOM H and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi and CHINA TELECOM 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 CHINA TELECOM H 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 CHINA TELECOM i.e., CHINA TELECOM and Hitachi go up and down completely randomly.
Pair Corralation between CHINA TELECOM and Hitachi
If you would invest 2,381 in Hitachi on September 19, 2024 and sell it today you would earn a total of 92.00 from holding Hitachi or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA TELECOM H vs. Hitachi
Performance |
| Timeline |
| CHINA TELECOM H |
| Hitachi |
CHINA TELECOM and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA TELECOM and Hitachi
The main advantage of trading using opposite CHINA TELECOM and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TELECOM 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.| CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc |
| Hitachi vs. DiamondRock Hospitality | Hitachi vs. CVS Health | Hitachi vs. CHINA TELECOM H | Hitachi vs. FEMALE HEALTH |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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