Correlation Between Hino Motors and Oshkosh

Can any of the company-specific risk be diversified away by investing in both Hino Motors and Oshkosh 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 Hino Motors and Oshkosh into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hino Motors Ltd and Oshkosh, you can compare the effects of market volatilities on Hino Motors and Oshkosh 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 Hino Motors with a short position of Oshkosh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hino Motors and Oshkosh.

Diversification Opportunities for Hino Motors and Oshkosh

-0.62

Correlation Coefficient

Hino Motors  Oshkosh

Excellent diversification

The 3 months correlation between Hino and Oshkosh is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hino Motors Ltd and Oshkosh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oshkosh and Hino Motors 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 Hino Motors Ltd are associated (or correlated) with Oshkosh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oshkosh has no effect on the direction of Hino Motors i.e., Hino Motors and Oshkosh go up and down completely randomly.

Pair Corralation between Hino Motors and Oshkosh

Assuming the 90 days horizon Hino Motors Ltd is expected to under-perform the Oshkosh. In addition to that, Hino Motors is 1.47 times more volatile than Oshkosh. It trades about -0.07 of its total potential returns per unit of risk. Oshkosh is currently generating about -0.04 per unit of volatility. If you would invest  10,534  in Oshkosh on September 16, 2024 and sell it today you would lose (534.00) from holding Oshkosh or give up 5.07% of portfolio value over 90 days.

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

Hino Motors Ltd  vs.  Oshkosh

Hino Motors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hino Motors Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Oshkosh

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oshkosh has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Oshkosh is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Hino Motors and Oshkosh

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

The idea behind Hino Motors Ltd and Oshkosh 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.