Correlation Between CITY OFFICE and Hitachi Zosen

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

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

Diversification Opportunities for CITY OFFICE and Hitachi Zosen

-0.04

Correlation Coefficient

CITY OFFICE  Hitachi Zosen

Good diversification

The 3 months correlation between CITY and Hitachi is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and Hitachi Zosen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Zosen and CITY OFFICE 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 CITY OFFICE REIT are associated (or correlated) with Hitachi Zosen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Zosen has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and Hitachi Zosen go up and down completely randomly.

Pair Corralation between CITY OFFICE and Hitachi Zosen

Assuming the 90 days horizon CITY OFFICE REIT is expected to under-perform the Hitachi Zosen. In addition to that, CITY OFFICE is 1.11 times more volatile than Hitachi Zosen. It trades about -0.03 of its total potential returns per unit of risk. Hitachi Zosen is currently generating about 0.05 per unit of volatility. If you would invest  563.00  in Hitachi Zosen on December 19, 2024 and sell it today you would earn a total of  31.00  from holding Hitachi Zosen or generate 5.51% return on investment over 90 days.

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

CITY OFFICE REIT  vs.  Hitachi Zosen

CITY OFFICE REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days CITY OFFICE REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CITY OFFICE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Hitachi Zosen

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hitachi Zosen are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hitachi Zosen may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CITY OFFICE and Hitachi Zosen

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

The idea behind CITY OFFICE REIT and Hitachi Zosen 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.