Correlation Between DATA MODUL and Hitachi Construction

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

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

Diversification Opportunities for DATA MODUL and Hitachi Construction

-0.41

Correlation Coefficient

DATA MODUL  Hitachi Construction

Very good diversification

The 3 months correlation between DATA and Hitachi is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding DATA MODUL and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and DATA MODUL 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 DATA MODUL 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 DATA MODUL i.e., DATA MODUL and Hitachi Construction go up and down completely randomly.

Pair Corralation between DATA MODUL and Hitachi Construction

Assuming the 90 days trading horizon DATA MODUL is expected to under-perform the Hitachi Construction. In addition to that, DATA MODUL is 1.13 times more volatile than Hitachi Construction Machinery. It trades about -0.07 of its total potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.11 per unit of volatility. If you would invest  1,940  in Hitachi Construction Machinery on October 25, 2024 and sell it today you would earn a total of  220.00  from holding Hitachi Construction Machinery or generate 11.34% return on investment over 90 days.

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

DATA MODUL   vs.  Hitachi Construction Machinery

DATA MODUL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATA MODUL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Hitachi Construction

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hitachi Construction Machinery are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hitachi Construction may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DATA MODUL and Hitachi Construction

The main advantage of trading using opposite DATA MODUL and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATA MODUL 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 DATA MODUL 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .