Correlation Between Hitachi and FUJIFILM Holdings

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

By analyzing existing cross correlation between Hitachi Ltd ADR and FUJIFILM Holdings, you can compare the effects of market volatilities on Hitachi and FUJIFILM Holdings 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 FUJIFILM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi and FUJIFILM Holdings.

Diversification Opportunities for Hitachi and FUJIFILM Holdings

-0.01

Correlation Coefficient

Hitachi  FUJIFILM Holdings

Good diversification

The 3 months correlation between Hitachi and FUJIFILM is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Ltd ADR and FUJIFILM Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUJIFILM Holdings 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 Ltd ADR are associated (or correlated) with FUJIFILM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUJIFILM Holdings has no effect on the direction of Hitachi i.e., Hitachi and FUJIFILM Holdings go up and down completely randomly.

Pair Corralation between Hitachi and FUJIFILM Holdings

Assuming the 90 days horizon Hitachi Ltd ADR is expected to generate 13.79 times more return on investment than FUJIFILM Holdings. However, Hitachi is 13.79 times more volatile than FUJIFILM Holdings. It trades about 0.08 of its potential returns per unit of risk. FUJIFILM Holdings is currently generating about 0.13 per unit of risk. If you would invest  2,652  in Hitachi Ltd ADR on December 10, 2024 and sell it today you would lose (202.00) from holding Hitachi Ltd ADR or give up 7.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Hitachi Ltd ADR  vs.  FUJIFILM Holdings

Hitachi Ltd ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hitachi Ltd ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, Hitachi showed solid returns over the last few months and may actually be approaching a breakup point.

FUJIFILM Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FUJIFILM Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, FUJIFILM Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hitachi and FUJIFILM Holdings

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

The idea behind Hitachi Ltd ADR and FUJIFILM Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.