Correlation Between Chalice Mining and Hitachi

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

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

Diversification Opportunities for Chalice Mining and Hitachi

-0.25

Correlation Coefficient

Chalice Mining  Hitachi

Very good diversification

The 3 months correlation between Chalice and Hitachi is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Chalice Mining Limited and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi and Chalice Mining 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 Chalice Mining Limited are associated (or correlated) with Hitachi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi has no effect on the direction of Chalice Mining i.e., Chalice Mining and Hitachi go up and down completely randomly.

Pair Corralation between Chalice Mining and Hitachi

Assuming the 90 days horizon Chalice Mining Limited is expected to under-perform the Hitachi. In addition to that, Chalice Mining is 1.94 times more volatile than Hitachi. It trades about -0.03 of its total potential returns per unit of risk. Hitachi is currently generating about 0.02 per unit of volatility. If you would invest  2,346  in Hitachi on September 23, 2024 and sell it today you would earn a total of  33.00  from holding Hitachi or generate 1.41% return on investment over 90 days.

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

Chalice Mining Limited  vs.  Hitachi

Chalice Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chalice Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hitachi

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hitachi are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Hitachi is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chalice Mining and Hitachi

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

The idea behind Chalice Mining Limited and Hitachi 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.