Correlation Between HITACHI CONSTRMACHADR/2 and Gladstone Investment

Can any of the company-specific risk be diversified away by investing in both HITACHI CONSTRMACHADR/2 and Gladstone Investment 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 CONSTRMACHADR/2 and Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HITACHI STRMACHADR2 and Gladstone Investment, you can compare the effects of market volatilities on HITACHI CONSTRMACHADR/2 and Gladstone Investment 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 CONSTRMACHADR/2 with a short position of Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of HITACHI CONSTRMACHADR/2 and Gladstone Investment.

Diversification Opportunities for HITACHI CONSTRMACHADR/2 and Gladstone Investment

0.13

Correlation Coefficient

HITACHI CONSTRMACHADR/2  Gladstone Investment

Average diversification

The 3 months correlation between HITACHI and Gladstone is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding HITACHI STRMACHADR2 and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and HITACHI CONSTRMACHADR/2 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 STRMACHADR2 are associated (or correlated) with Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of HITACHI CONSTRMACHADR/2 i.e., HITACHI CONSTRMACHADR/2 and Gladstone Investment go up and down completely randomly.

Pair Corralation between HITACHI CONSTRMACHADR/2 and Gladstone Investment

Assuming the 90 days trading horizon HITACHI STRMACHADR2 is expected to generate 1.22 times more return on investment than Gladstone Investment. However, HITACHI CONSTRMACHADR/2 is 1.22 times more volatile than Gladstone Investment. It trades about 0.19 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.02 per unit of risk. If you would invest  4,100  in HITACHI STRMACHADR2 on December 28, 2024 and sell it today you would earn a total of  950.00  from holding HITACHI STRMACHADR2 or generate 23.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

HITACHI STRMACHADR2  vs.  Gladstone Investment

HITACHI CONSTRMACHADR/2

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HITACHI STRMACHADR2 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain primary indicators, HITACHI CONSTRMACHADR/2 reported solid returns over the last few months and may actually be approaching a breakup point.

Gladstone Investment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gladstone Investment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HITACHI CONSTRMACHADR/2 and Gladstone Investment

The main advantage of trading using opposite HITACHI CONSTRMACHADR/2 and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HITACHI CONSTRMACHADR/2 position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.

The idea behind HITACHI STRMACHADR2 and Gladstone Investment 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.