Correlation Between CK Hutchison and Hitachi
Can any of the company-specific risk be diversified away by investing in both CK Hutchison and Hitachi 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 CK Hutchison and Hitachi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CK Hutchison Holdings and Hitachi, you can compare the effects of market volatilities on CK Hutchison and Hitachi 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 CK Hutchison with a short position of Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK Hutchison and Hitachi.
Diversification Opportunities for CK Hutchison and Hitachi
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2CK and Hitachi is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding CK Hutchison Holdings and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi and CK Hutchison 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 CK Hutchison Holdings are associated (or correlated) with Hitachi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi has no effect on the direction of CK Hutchison i.e., CK Hutchison and Hitachi go up and down completely randomly.
Pair Corralation between CK Hutchison and Hitachi
Assuming the 90 days horizon CK Hutchison Holdings is expected to generate 0.3 times more return on investment than Hitachi. However, CK Hutchison Holdings is 3.3 times less risky than Hitachi. It trades about -0.04 of its potential returns per unit of risk. Hitachi is currently generating about -0.12 per unit of risk. If you would invest 495.00 in CK Hutchison Holdings on August 29, 2024 and sell it today you would lose (4.00) from holding CK Hutchison Holdings or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CK Hutchison Holdings vs. Hitachi
Performance |
| Timeline |
| CK Hutchison Holdings |
| Hitachi |
CK Hutchison and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CK Hutchison and Hitachi
The main advantage of trading using opposite CK Hutchison and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CK Hutchison position performs unexpectedly, Hitachi 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 will offset losses from the drop in Hitachi's long position.| CK Hutchison vs. ALERION CLEANPOWER | CK Hutchison vs. Cleanaway Waste Management | CK Hutchison vs. GEELY AUTOMOBILE | CK Hutchison vs. Ross Stores |
| Hitachi vs. ONWARD MEDICAL BV | Hitachi vs. SOLSTAD OFFSHORE NK | Hitachi vs. MEDICAL FACILITIES NEW | Hitachi vs. Diamyd Medical AB |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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