Correlation Between Hitachi and Mitsui

Can any of the company-specific risk be diversified away by investing in both Hitachi and Mitsui 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 Mitsui 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 Mitsui Company, you can compare the effects of market volatilities on Hitachi and Mitsui 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 Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi and Mitsui.

Diversification Opportunities for Hitachi and Mitsui

-0.33

Correlation Coefficient

Hitachi  Mitsui

Very good diversification

The 3 months correlation between Hitachi and Mitsui is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Ltd ADR and Mitsui Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Company 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 Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Company has no effect on the direction of Hitachi i.e., Hitachi and Mitsui go up and down completely randomly.

Pair Corralation between Hitachi and Mitsui

If you would invest  4,789  in Hitachi Ltd ADR on September 3, 2024 and sell it today you would earn a total of  239.00  from holding Hitachi Ltd ADR or generate 4.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Hitachi Ltd ADR  vs.  Mitsui Company

Hitachi Ltd ADR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hitachi Ltd ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, Hitachi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mitsui Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsui Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Mitsui 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 Mitsui

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

The idea behind Hitachi Ltd ADR and Mitsui Company 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.