Correlation Between Hitachi Metals and PICC Property

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

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

Diversification Opportunities for Hitachi Metals and PICC Property

0.0

Correlation Coefficient

Hitachi Metals  PICC Property

Pay attention - limited upside

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

Pair Corralation between Hitachi Metals and PICC Property

If you would invest  3,929  in PICC Property and on December 29, 2024 and sell it today you would earn a total of  626.00  from holding PICC Property and or generate 15.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Hitachi Metals  vs.  PICC Property and

Hitachi Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hitachi Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Hitachi Metals is not utilizing all of its potentials. The new stock price disturbance, may contribute to mid-run losses for the stockholders.

PICC Property

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PICC Property and are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, PICC Property showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hitachi Metals and PICC Property

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

The idea behind Hitachi Metals and PICC Property and 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.