Correlation Between BANK OF QUEENSLAND (BXZSG and Hitachi Construction

Can any of the company-specific risk be diversified away by investing in both BANK OF QUEENSLAND (BXZSG 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 BANK OF QUEENSLAND (BXZSG and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BANK OF QUEENSLAND and Hitachi Construction Machinery, you can compare the effects of market volatilities on BANK OF QUEENSLAND (BXZSG 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 BANK OF QUEENSLAND (BXZSG with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OF QUEENSLAND (BXZSG and Hitachi Construction.

Diversification Opportunities for BANK OF QUEENSLAND (BXZSG and Hitachi Construction

-0.32

Correlation Coefficient

BANK OF QUEENSLAND (BXZSG  Hitachi Construction

Very good diversification

The 3 months correlation between BANK and Hitachi is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF QUEENSLAND and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and BANK OF QUEENSLAND (BXZSG 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 BANK OF QUEENSLAND 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 BANK OF QUEENSLAND (BXZSG i.e., BANK OF QUEENSLAND (BXZSG and Hitachi Construction go up and down completely randomly.

Pair Corralation between BANK OF QUEENSLAND (BXZSG and Hitachi Construction

Assuming the 90 days trading horizon BANK OF QUEENSLAND is expected to under-perform the Hitachi Construction. But the stock apears to be less risky and, when comparing its historical volatility, BANK OF QUEENSLAND is 1.43 times less risky than Hitachi Construction. The stock trades about -0.04 of its potential returns per unit of risk. The Hitachi Construction Machinery is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,040  in Hitachi Construction Machinery on December 20, 2024 and sell it today you would earn a total of  560.00  from holding Hitachi Construction Machinery or generate 27.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

BANK OF QUEENSLAND  vs.  Hitachi Construction Machinery

BANK OF QUEENSLAND (BXZSG

Risk-Adjusted Performance

Very Weak

Over the last 90 days BANK OF QUEENSLAND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BANK OF QUEENSLAND (BXZSG is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Hitachi Construction

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hitachi Construction Machinery are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hitachi Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK OF QUEENSLAND (BXZSG and Hitachi Construction

The main advantage of trading using opposite BANK OF QUEENSLAND (BXZSG and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK OF QUEENSLAND (BXZSG 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.

The idea behind BANK OF QUEENSLAND and Hitachi Construction Machinery 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.