Correlation Between Hitachi and Toshiba Corp

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

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

Diversification Opportunities for Hitachi and Toshiba Corp

0.0

Correlation Coefficient

Hitachi  Toshiba Corp

Pay attention - limited upside

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

Pair Corralation between Hitachi and Toshiba Corp

Assuming the 90 days horizon Hitachi is expected to generate 51.7 times more return on investment than Toshiba Corp. However, Hitachi is 51.7 times more volatile than Toshiba Corp PK. It trades about 0.14 of its potential returns per unit of risk. Toshiba Corp PK is currently generating about -0.04 per unit of risk. If you would invest  972.00  in Hitachi on October 11, 2024 and sell it today you would earn a total of  1,531  from holding Hitachi or generate 157.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	26.61%
Values	Daily Returns

Hitachi  vs.  Toshiba Corp PK

Hitachi

Risk-Adjusted Performance

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Very Weak

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

Toshiba Corp PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toshiba Corp PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Toshiba Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hitachi and Toshiba Corp

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

The idea behind Hitachi and Toshiba Corp PK 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.