Correlation Between HITACHI CONSTRMACHADR/2 and Agilent Technologies

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

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

Diversification Opportunities for HITACHI CONSTRMACHADR/2 and Agilent Technologies

-0.54

Correlation Coefficient

HITACHI CONSTRMACHADR/2  Agilent Technologies

Excellent diversification

The 3 months correlation between HITACHI and Agilent is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding HITACHI STRMACHADR2 and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies 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 Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of HITACHI CONSTRMACHADR/2 i.e., HITACHI CONSTRMACHADR/2 and Agilent Technologies go up and down completely randomly.

Pair Corralation between HITACHI CONSTRMACHADR/2 and Agilent Technologies

Assuming the 90 days trading horizon HITACHI STRMACHADR2 is expected to generate 1.17 times more return on investment than Agilent Technologies. However, HITACHI CONSTRMACHADR/2 is 1.17 times more volatile than Agilent Technologies. It trades about 0.21 of its potential returns per unit of risk. Agilent Technologies is currently generating about -0.14 per unit of risk. If you would invest  4,060  in HITACHI STRMACHADR2 on December 23, 2024 and sell it today you would earn a total of  1,040  from holding HITACHI STRMACHADR2 or generate 25.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

HITACHI STRMACHADR2  vs.  Agilent Technologies

HITACHI CONSTRMACHADR/2

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HITACHI STRMACHADR2 are ranked lower than 16 (%) 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.

Agilent Technologies

Risk-Adjusted Performance

Very Weak

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

Pair Trading with HITACHI CONSTRMACHADR/2 and Agilent Technologies

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

The idea behind HITACHI STRMACHADR2 and Agilent Technologies 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.