Correlation Between CK Hutchison and 3M
Can any of the company-specific risk be diversified away by investing in both CK Hutchison and 3M 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 3M 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 3M Company, you can compare the effects of market volatilities on CK Hutchison and 3M 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 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK Hutchison and 3M.
Diversification Opportunities for CK Hutchison and 3M
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CKHUF and 3M is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding CK Hutchison Holdings and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company 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 3M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M Company has no effect on the direction of CK Hutchison i.e., CK Hutchison and 3M go up and down completely randomly.
Pair Corralation between CK Hutchison and 3M
Assuming the 90 days horizon CK Hutchison Holdings is expected to generate 21.53 times more return on investment than 3M. However, CK Hutchison is 21.53 times more volatile than 3M Company. It trades about 0.14 of its potential returns per unit of risk. 3M Company is currently generating about 0.04 per unit of risk. If you would invest 611.00 in CK Hutchison Holdings on September 3, 2024 and sell it today you would lose (101.00) from holding CK Hutchison Holdings or give up 16.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 88.63% |
| Values | Daily Returns |
CK Hutchison Holdings vs. 3M Company
Performance |
| Timeline |
| CK Hutchison Holdings |
| 3M Company |
CK Hutchison and 3M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CK Hutchison and 3M
The main advantage of trading using opposite CK Hutchison and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CK Hutchison position performs unexpectedly, 3M 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 3M will offset losses from the drop in 3M's long position.| CK Hutchison vs. Grupo Bimbo SAB | CK Hutchison vs. Grupo Financiero Inbursa | CK Hutchison vs. Becle SA de | CK Hutchison vs. HUMANA INC |
| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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