Correlation Between Hitachi Construction and WuXi AppTec
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and WuXi AppTec 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 Hitachi Construction and WuXi AppTec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hitachi Construction Machinery and WuXi AppTec Co, you can compare the effects of market volatilities on Hitachi Construction and WuXi AppTec 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 Hitachi Construction with a short position of WuXi AppTec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and WuXi AppTec.
Diversification Opportunities for Hitachi Construction and WuXi AppTec
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hitachi and WuXi is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec and Hitachi Construction 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 Hitachi Construction Machinery are associated (or correlated) with WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and WuXi AppTec go up and down completely randomly.
Pair Corralation between Hitachi Construction and WuXi AppTec
Assuming the 90 days horizon Hitachi Construction Machinery is expected to under-perform the WuXi AppTec. But the stock apears to be less risky and, when comparing its historical volatility, Hitachi Construction Machinery is 3.5 times less risky than WuXi AppTec. The stock trades about -0.04 of its potential returns per unit of risk. The WuXi AppTec Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 476.00 in WuXi AppTec Co on September 24, 2024 and sell it today you would earn a total of 189.00 from holding WuXi AppTec Co or generate 39.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hitachi Construction Machinery vs. WuXi AppTec Co
Performance |
Timeline |
Hitachi Construction |
WuXi AppTec |
Hitachi Construction and WuXi AppTec Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hitachi Construction and WuXi AppTec
The main advantage of trading using opposite Hitachi Construction and WuXi AppTec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, WuXi AppTec 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 WuXi AppTec will offset losses from the drop in WuXi AppTec's long position.Hitachi Construction vs. Gaztransport Technigaz SA | Hitachi Construction vs. Monster Beverage Corp | Hitachi Construction vs. Transportadora de Gas | Hitachi Construction vs. COLUMBIA SPORTSWEAR |
WuXi AppTec vs. Hitachi Construction Machinery | WuXi AppTec vs. Take Two Interactive Software | WuXi AppTec vs. Daito Trust Construction | WuXi AppTec vs. Australian 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Transaction History View history of all your transactions and understand their impact on performance | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories |