Correlation Between Oshkosh and Hino Motors

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

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

Diversification Opportunities for Oshkosh and Hino Motors

-0.39

Correlation Coefficient

Oshkosh  Hino Motors

Very good diversification

The 3 months correlation between Oshkosh and Hino is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Oshkosh and Hino Motors Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hino Motors and Oshkosh 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 Oshkosh are associated (or correlated) with Hino Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hino Motors has no effect on the direction of Oshkosh i.e., Oshkosh and Hino Motors go up and down completely randomly.

Pair Corralation between Oshkosh and Hino Motors

Considering the 90-day investment horizon Oshkosh is expected to generate 0.54 times more return on investment than Hino Motors. However, Oshkosh is 1.85 times less risky than Hino Motors. It trades about -0.39 of its potential returns per unit of risk. Hino Motors Ltd is currently generating about -0.22 per unit of risk. If you would invest  11,232  in Oshkosh on December 5, 2024 and sell it today you would lose (1,695) from holding Oshkosh or give up 15.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Oshkosh  vs.  Hino Motors Ltd

Oshkosh

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oshkosh has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Hino Motors

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Oshkosh and Hino Motors

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

The idea behind Oshkosh and Hino Motors Ltd 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.