Correlation Between HITACHI CONSTRMACHADR/2 and AeroVironment

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

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

Diversification Opportunities for HITACHI CONSTRMACHADR/2 and AeroVironment

-0.61

Correlation Coefficient

HITACHI CONSTRMACHADR/2  AeroVironment

Excellent diversification

The 3 months correlation between HITACHI and AeroVironment is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding HITACHI STRMACHADR2 and AeroVironment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroVironment 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 AeroVironment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AeroVironment has no effect on the direction of HITACHI CONSTRMACHADR/2 i.e., HITACHI CONSTRMACHADR/2 and AeroVironment go up and down completely randomly.

Pair Corralation between HITACHI CONSTRMACHADR/2 and AeroVironment

Assuming the 90 days trading horizon HITACHI STRMACHADR2 is expected to generate 0.65 times more return on investment than AeroVironment. However, HITACHI STRMACHADR2 is 1.53 times less risky than AeroVironment. It trades about 0.19 of its potential returns per unit of risk. AeroVironment is currently generating about -0.14 per unit of risk. If you would invest  4,140  in HITACHI STRMACHADR2 on December 25, 2024 and sell it today you would earn a total of  960.00  from holding HITACHI STRMACHADR2 or generate 23.19% return on investment over 90 days.

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

HITACHI STRMACHADR2  vs.  AeroVironment

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 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, HITACHI CONSTRMACHADR/2 reported solid returns over the last few months and may actually be approaching a breakup point.

AeroVironment

Risk-Adjusted Performance

Very Weak

Over the last 90 days AeroVironment 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 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 AeroVironment

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

The idea behind HITACHI STRMACHADR2 and AeroVironment 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.