Correlation Between KURITA WTR and Hitachi Zosen

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

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

Diversification Opportunities for KURITA WTR and Hitachi Zosen

0.56

Correlation Coefficient

KURITA WTR  Hitachi Zosen

Very weak diversification

The 3 months correlation between KURITA and Hitachi is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding KURITA WTR INDUNSPADR and Hitachi Zosen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Zosen and KURITA WTR 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 KURITA WTR INDUNSPADR 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 KURITA WTR i.e., KURITA WTR and Hitachi Zosen go up and down completely randomly.

Pair Corralation between KURITA WTR and Hitachi Zosen

Assuming the 90 days trading horizon KURITA WTR INDUNSPADR is expected to generate 1.35 times more return on investment than Hitachi Zosen. However, KURITA WTR is 1.35 times more volatile than Hitachi Zosen. It trades about 0.08 of its potential returns per unit of risk. Hitachi Zosen is currently generating about 0.05 per unit of risk. If you would invest  5,650  in KURITA WTR INDUNSPADR on April 24, 2025 and sell it today you would earn a total of  600.00  from holding KURITA WTR INDUNSPADR or generate 10.62% return on investment over 90 days.

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

KURITA WTR INDUNSPADR  vs.  Hitachi Zosen

KURITA WTR INDUNSPADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KURITA WTR INDUNSPADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, KURITA WTR may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Hitachi Zosen

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hitachi Zosen are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Hitachi Zosen is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KURITA WTR and Hitachi Zosen

The main advantage of trading using opposite KURITA WTR and Hitachi Zosen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KURITA WTR 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 KURITA WTR INDUNSPADR 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.