Correlation Between Hitachi Construction and ZINC MEDIA

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

Diversification Opportunities for Hitachi Construction and ZINC MEDIA

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Correlation Coefficient

Hitachi Construction  ZINC MEDIA

Pay attention - limited upside

The 3 months correlation between Hitachi and ZINC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and ZINC MEDIA GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZINC MEDIA GR 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 ZINC MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZINC MEDIA GR has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and ZINC MEDIA go up and down completely randomly.

Pair Corralation between Hitachi Construction and ZINC MEDIA

Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 0.74 times more return on investment than ZINC MEDIA. However, Hitachi Construction Machinery is 1.35 times less risky than ZINC MEDIA. It trades about -0.09 of its potential returns per unit of risk. ZINC MEDIA GR is currently generating about -0.12 per unit of risk. If you would invest  2,120  in Hitachi Construction Machinery on October 5, 2024 and sell it today you would lose (60.00) from holding Hitachi Construction Machinery or give up 2.83% of portfolio value over 90 days.

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

Hitachi Construction Machinery  vs.  ZINC MEDIA GR

Hitachi Construction

Risk-Adjusted Performance

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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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ZINC MEDIA GR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZINC MEDIA GR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hitachi Construction and ZINC MEDIA

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

The idea behind Hitachi Construction Machinery and ZINC MEDIA GR 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.