Correlation Between Hanshin Construction and MEDIANA CoLtd

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

By analyzing existing cross correlation between Hanshin Construction Co and MEDIANA CoLtd, you can compare the effects of market volatilities on Hanshin Construction and MEDIANA CoLtd 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 Hanshin Construction with a short position of MEDIANA CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and MEDIANA CoLtd.

Diversification Opportunities for Hanshin Construction and MEDIANA CoLtd

0.11

Correlation Coefficient

Hanshin Construction  MEDIANA CoLtd

Average diversification

The 3 months correlation between Hanshin and MEDIANA is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and MEDIANA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIANA CoLtd and Hanshin 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 Hanshin Construction Co are associated (or correlated) with MEDIANA CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIANA CoLtd has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and MEDIANA CoLtd go up and down completely randomly.

Pair Corralation between Hanshin Construction and MEDIANA CoLtd

Assuming the 90 days trading horizon Hanshin Construction is expected to generate 1.89 times less return on investment than MEDIANA CoLtd. But when comparing it to its historical volatility, Hanshin Construction Co is 1.32 times less risky than MEDIANA CoLtd. It trades about 0.23 of its potential returns per unit of risk. MEDIANA CoLtd is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  430,500  in MEDIANA CoLtd on October 9, 2024 and sell it today you would earn a total of  77,500  from holding MEDIANA CoLtd or generate 18.0% return on investment over 90 days.

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

Hanshin Construction Co  vs.  MEDIANA CoLtd

Hanshin Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanshin Construction Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hanshin Construction is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MEDIANA CoLtd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MEDIANA CoLtd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MEDIANA CoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hanshin Construction and MEDIANA CoLtd

The main advantage of trading using opposite Hanshin Construction and MEDIANA CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, MEDIANA CoLtd 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 MEDIANA CoLtd will offset losses from the drop in MEDIANA CoLtd's long position.

The idea behind Hanshin Construction Co and MEDIANA CoLtd 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.