Correlation Between CHINA CH and Hitachi Zosen

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

By analyzing existing cross correlation between CHINA CH VENT and Hitachi Zosen, you can compare the effects of market volatilities on CHINA CH and Hitachi Zosen 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 CHINA CH with a short position of Hitachi Zosen. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA CH and Hitachi Zosen.

Diversification Opportunities for CHINA CH and Hitachi Zosen

0.4

Correlation Coefficient

CHINA CH  Hitachi Zosen

Very weak diversification

The 3 months correlation between CHINA and Hitachi is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CHINA CH VENT and Hitachi Zosen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Zosen and CHINA CH 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 CHINA CH VENT are associated (or correlated) with Hitachi Zosen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Zosen has no effect on the direction of CHINA CH i.e., CHINA CH and Hitachi Zosen go up and down completely randomly.

Pair Corralation between CHINA CH and Hitachi Zosen

Assuming the 90 days horizon CHINA CH VENT is expected to generate 2.67 times more return on investment than Hitachi Zosen. However, CHINA CH is 2.67 times more volatile than Hitachi Zosen. It trades about 0.07 of its potential returns per unit of risk. Hitachi Zosen is currently generating about 0.06 per unit of risk. If you would invest  88.00  in CHINA CH VENT on April 22, 2025 and sell it today you would earn a total of  14.00  from holding CHINA CH VENT or generate 15.91% return on investment over 90 days.

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

CHINA CH VENT  vs.  Hitachi Zosen

CHINA CH VENT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA CH VENT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CHINA CH reported solid returns over the last few months and may actually be approaching a breakup point.

Hitachi Zosen

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hitachi Zosen are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hitachi Zosen may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CHINA CH and Hitachi Zosen

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

The idea behind CHINA CH VENT and Hitachi Zosen 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.