Correlation Between QBE Insurance and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Hitachi Construction 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 QBE Insurance and Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QBE Insurance Group and Hitachi Construction Machinery, you can compare the effects of market volatilities on QBE Insurance and Hitachi Construction 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 QBE Insurance with a short position of Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Hitachi Construction.
Diversification Opportunities for QBE Insurance and Hitachi Construction
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between QBE and Hitachi is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction and QBE Insurance 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 QBE Insurance Group are associated (or correlated) with Hitachi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Construction has no effect on the direction of QBE Insurance i.e., QBE Insurance and Hitachi Construction go up and down completely randomly.
Pair Corralation between QBE Insurance and Hitachi Construction
Assuming the 90 days horizon QBE Insurance is expected to generate 3.51 times less return on investment than Hitachi Construction. But when comparing it to its historical volatility, QBE Insurance Group is 1.33 times less risky than Hitachi Construction. It trades about 0.06 of its potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,120 in Hitachi Construction Machinery on December 2, 2024 and sell it today you would earn a total of 340.00 from holding Hitachi Construction Machinery or generate 16.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
QBE Insurance Group vs. Hitachi Construction Machinery
Performance |
Timeline |
QBE Insurance Group |
Hitachi Construction |
QBE Insurance and Hitachi Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with QBE Insurance and Hitachi Construction
The main advantage of trading using opposite QBE Insurance and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Hitachi Construction 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 Construction will offset losses from the drop in Hitachi Construction's long position.QBE Insurance vs. Molson Coors Beverage | QBE Insurance vs. LINMON MEDIA LTD | QBE Insurance vs. MOLSON RS BEVERAGE | QBE Insurance vs. Fevertree Drinks PLC |
Hitachi Construction vs. BANKINTER ADR 2007 | Hitachi Construction vs. Commonwealth Bank of | Hitachi Construction vs. PT Bank Maybank | Hitachi Construction vs. Singapore Telecommunications Limited |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |