Correlation Between Hitachi Construction and DATA MODUL

Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and DATA MODUL 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 DATA MODUL 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 DATA MODUL , you can compare the effects of market volatilities on Hitachi Construction and DATA MODUL 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 DATA MODUL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and DATA MODUL.

Diversification Opportunities for Hitachi Construction and DATA MODUL

-0.41

Correlation Coefficient

Hitachi Construction  DATA MODUL

Very good diversification

The 3 months correlation between Hitachi and DATA is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and DATA MODUL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATA MODUL 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 DATA MODUL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATA MODUL has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and DATA MODUL go up and down completely randomly.

Pair Corralation between Hitachi Construction and DATA MODUL

Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 0.88 times more return on investment than DATA MODUL. However, Hitachi Construction Machinery is 1.13 times less risky than DATA MODUL. It trades about 0.11 of its potential returns per unit of risk. DATA MODUL is currently generating about -0.07 per unit of risk. 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

Hitachi Construction Machinery  vs.  DATA MODUL

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.

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.

Pair Trading with Hitachi Construction and DATA MODUL

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

The idea behind Hitachi Construction Machinery and DATA MODUL 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.