Correlation Between China BlueChemical and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both China BlueChemical and Hitachi Construction 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 BlueChemical and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and Hitachi Construction Machinery, you can compare the effects of market volatilities on China BlueChemical and Hitachi Construction 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 BlueChemical with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and Hitachi Construction.
Diversification Opportunities for China BlueChemical and Hitachi Construction
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Hitachi is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and China BlueChemical 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 BlueChemical are associated (or correlated) with Hitachi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Construction has no effect on the direction of China BlueChemical i.e., China BlueChemical and Hitachi Construction go up and down completely randomly.
Pair Corralation between China BlueChemical and Hitachi Construction
Assuming the 90 days horizon China BlueChemical is expected to generate 1.68 times more return on investment than Hitachi Construction. However, China BlueChemical is 1.68 times more volatile than Hitachi Construction Machinery. It trades about 0.03 of its potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.0 per unit of risk. If you would invest 21.00 in China BlueChemical on September 11, 2024 and sell it today you would earn a total of 2.00 from holding China BlueChemical or generate 9.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
China BlueChemical vs. Hitachi Construction Machinery
Performance |
Timeline |
China BlueChemical |
Hitachi Construction |
China BlueChemical and Hitachi Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China BlueChemical and Hitachi Construction
The main advantage of trading using opposite China BlueChemical and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical position performs unexpectedly, Hitachi Construction 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 Construction will offset losses from the drop in Hitachi Construction's long position.China BlueChemical vs. Superior Plus Corp | China BlueChemical vs. NMI Holdings | China BlueChemical vs. Origin Agritech | China BlueChemical vs. SIVERS SEMICONDUCTORS AB |
Hitachi Construction vs. HYDROFARM HLD GRP | Hitachi Construction vs. Sterling Construction | Hitachi Construction vs. Apollo Investment Corp | Hitachi Construction vs. AUST AGRICULTURAL |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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