Correlation Between Grupo Financiero and Hitachi

Can any of the company-specific risk be diversified away by investing in both Grupo Financiero 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 Grupo Financiero and Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grupo Financiero Inbursa and Hitachi, you can compare the effects of market volatilities on Grupo Financiero 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 Grupo Financiero with a short position of Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and Hitachi.

Diversification Opportunities for Grupo Financiero and Hitachi

-0.15

Correlation Coefficient

Grupo Financiero  Hitachi

Good diversification

The 3 months correlation between Grupo and Hitachi is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Inbursa and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi and Grupo Financiero 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 Grupo Financiero Inbursa 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 Grupo Financiero i.e., Grupo Financiero and Hitachi go up and down completely randomly.

Pair Corralation between Grupo Financiero and Hitachi

Assuming the 90 days horizon Grupo Financiero Inbursa is expected to under-perform the Hitachi. But the pink sheet apears to be less risky and, when comparing its historical volatility, Grupo Financiero Inbursa is 2.98 times less risky than Hitachi. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Hitachi is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,197  in Hitachi on September 5, 2024 and sell it today you would earn a total of  421.00  from holding Hitachi or generate 19.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Grupo Financiero Inbursa  vs.  Hitachi

Grupo Financiero Inbursa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Financiero Inbursa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hitachi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hitachi are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Hitachi reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Financiero and Hitachi

The main advantage of trading using opposite Grupo Financiero and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero 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.

The idea behind Grupo Financiero Inbursa and Hitachi pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.