Correlation Between MOLSON RS and HITACHI CONSTRMACHADR/2

Can any of the company-specific risk be diversified away by investing in both MOLSON RS and HITACHI CONSTRMACHADR/2 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 MOLSON RS and HITACHI CONSTRMACHADR/2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MOLSON RS BEVERAGE and HITACHI STRMACHADR2, you can compare the effects of market volatilities on MOLSON RS and HITACHI CONSTRMACHADR/2 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 MOLSON RS with a short position of HITACHI CONSTRMACHADR/2. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOLSON RS and HITACHI CONSTRMACHADR/2.

Diversification Opportunities for MOLSON RS and HITACHI CONSTRMACHADR/2

0.61

Correlation Coefficient

MOLSON RS  HITACHI CONSTRMACHADR/2

Poor diversification

The 3 months correlation between MOLSON and HITACHI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding MOLSON RS BEVERAGE and HITACHI STRMACHADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HITACHI CONSTRMACHADR/2 and MOLSON RS 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 MOLSON RS BEVERAGE are associated (or correlated) with HITACHI CONSTRMACHADR/2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HITACHI CONSTRMACHADR/2 has no effect on the direction of MOLSON RS i.e., MOLSON RS and HITACHI CONSTRMACHADR/2 go up and down completely randomly.

Pair Corralation between MOLSON RS and HITACHI CONSTRMACHADR/2

Assuming the 90 days trading horizon MOLSON RS is expected to generate 1.23 times less return on investment than HITACHI CONSTRMACHADR/2. In addition to that, MOLSON RS is 1.65 times more volatile than HITACHI STRMACHADR2. It trades about 0.1 of its total potential returns per unit of risk. HITACHI STRMACHADR2 is currently generating about 0.21 per unit of volatility. If you would invest  4,060  in HITACHI STRMACHADR2 on December 23, 2024 and sell it today you would earn a total of  1,040  from holding HITACHI STRMACHADR2 or generate 25.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

MOLSON RS BEVERAGE  vs.  HITACHI STRMACHADR2

MOLSON RS BEVERAGE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MOLSON RS BEVERAGE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MOLSON RS reported solid returns over the last few months and may actually be approaching a breakup point.

HITACHI CONSTRMACHADR/2

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HITACHI STRMACHADR2 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain primary indicators, HITACHI CONSTRMACHADR/2 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MOLSON RS and HITACHI CONSTRMACHADR/2

The main advantage of trading using opposite MOLSON RS and HITACHI CONSTRMACHADR/2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOLSON RS position performs unexpectedly, HITACHI CONSTRMACHADR/2 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 HITACHI CONSTRMACHADR/2 will offset losses from the drop in HITACHI CONSTRMACHADR/2's long position.

The idea behind MOLSON RS BEVERAGE and HITACHI STRMACHADR2 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.