Correlation Between Public Storage and HUTCHMED China
Can any of the company-specific risk be diversified away by investing in both Public Storage and HUTCHMED China 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 Public Storage and HUTCHMED China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and HUTCHMED China, you can compare the effects of market volatilities on Public Storage and HUTCHMED China 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 Public Storage with a short position of HUTCHMED China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and HUTCHMED China.
Diversification Opportunities for Public Storage and HUTCHMED China
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Public and HUTCHMED is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and HUTCHMED China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHMED China and Public Storage 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 Public Storage are associated (or correlated) with HUTCHMED China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUTCHMED China has no effect on the direction of Public Storage i.e., Public Storage and HUTCHMED China go up and down completely randomly.
Pair Corralation between Public Storage and HUTCHMED China
Assuming the 90 days trading horizon Public Storage is expected to under-perform the HUTCHMED China. But the stock apears to be less risky and, when comparing its historical volatility, Public Storage is 2.93 times less risky than HUTCHMED China. The stock trades about -0.09 of its potential returns per unit of risk. The HUTCHMED China is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 27,600 in HUTCHMED China on September 12, 2024 and sell it today you would lose (600.00) from holding HUTCHMED China or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Storage vs. HUTCHMED China
Performance |
| Timeline |
| Public Storage |
| HUTCHMED China |
Public Storage and HUTCHMED China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and HUTCHMED China
The main advantage of trading using opposite Public Storage and HUTCHMED China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, HUTCHMED China 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 HUTCHMED China will offset losses from the drop in HUTCHMED China's long position.| Public Storage vs. Hong Kong Land | Public Storage vs. Neometals | Public Storage vs. Coor Service Management | Public Storage vs. Fidelity Sustainable USD |
| HUTCHMED China vs. CleanTech Lithium plc | HUTCHMED China vs. Neometals | HUTCHMED China vs. American Homes 4 | HUTCHMED China vs. Central Asia Metals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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