Correlation Between FUJIFILM Holdings and Hitachi

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

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

Diversification Opportunities for FUJIFILM Holdings and Hitachi

0.34

Correlation Coefficient

FUJIFILM Holdings  Hitachi

Weak diversification

The 3 months correlation between FUJIFILM and Hitachi is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding FUJIFILM Holdings and Hitachi Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Ltd ADR and FUJIFILM Holdings 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 FUJIFILM Holdings 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 Ltd ADR has no effect on the direction of FUJIFILM Holdings i.e., FUJIFILM Holdings and Hitachi go up and down completely randomly.

Pair Corralation between FUJIFILM Holdings and Hitachi

Assuming the 90 days horizon FUJIFILM Holdings is expected to generate 2.98 times more return on investment than Hitachi. However, FUJIFILM Holdings is 2.98 times more volatile than Hitachi Ltd ADR. It trades about 0.09 of its potential returns per unit of risk. Hitachi Ltd ADR is currently generating about 0.08 per unit of risk. If you would invest  2,045  in FUJIFILM Holdings on September 19, 2024 and sell it today you would earn a total of  165.00  from holding FUJIFILM Holdings or generate 8.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

FUJIFILM Holdings  vs.  Hitachi Ltd ADR

FUJIFILM Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hitachi Ltd ADR

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Hitachi Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Hitachi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FUJIFILM Holdings and Hitachi

The main advantage of trading using opposite FUJIFILM Holdings and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUJIFILM Holdings 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 FUJIFILM Holdings and Hitachi Ltd ADR 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.