Correlation Between Hitachi Construction and PT Global

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

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

Diversification Opportunities for Hitachi Construction and PT Global

0.16

Correlation Coefficient

Hitachi Construction  PT Global

Average diversification

The 3 months correlation between Hitachi and 06L is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and PT Global Mediacom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Global Mediacom and Hitachi Construction 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 Hitachi Construction Machinery are associated (or correlated) with PT Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Global Mediacom has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and PT Global go up and down completely randomly.

Pair Corralation between Hitachi Construction and PT Global

Assuming the 90 days horizon Hitachi Construction Machinery is expected to under-perform the PT Global. But the stock apears to be less risky and, when comparing its historical volatility, Hitachi Construction Machinery is 8.95 times less risky than PT Global. The stock trades about -0.07 of its potential returns per unit of risk. The PT Global Mediacom is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.75  in PT Global Mediacom on October 4, 2024 and sell it today you would lose (0.20) from holding PT Global Mediacom or give up 26.67% of portfolio value over 90 days.

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

Hitachi Construction Machinery  vs.  PT Global Mediacom

Hitachi Construction

Risk-Adjusted Performance

0 of 100

Very Weak

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

PT Global Mediacom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Global Mediacom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hitachi Construction and PT Global

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

The idea behind Hitachi Construction Machinery and PT Global Mediacom 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.