Correlation Between CK Hutchison and Sumitomo Corp
Can any of the company-specific risk be diversified away by investing in both CK Hutchison and Sumitomo Corp 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 Sumitomo Corp 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 Sumitomo Corp ADR, you can compare the effects of market volatilities on CK Hutchison and Sumitomo Corp 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 Sumitomo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK Hutchison and Sumitomo Corp.
Diversification Opportunities for CK Hutchison and Sumitomo Corp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CKHUF and Sumitomo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding CK Hutchison Holdings and Sumitomo Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Corp ADR 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 Sumitomo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Corp ADR has no effect on the direction of CK Hutchison i.e., CK Hutchison and Sumitomo Corp go up and down completely randomly.
Pair Corralation between CK Hutchison and Sumitomo Corp
Assuming the 90 days horizon CK Hutchison Holdings is expected to under-perform the Sumitomo Corp. In addition to that, CK Hutchison is 1.01 times more volatile than Sumitomo Corp ADR. It trades about -0.15 of its total potential returns per unit of risk. Sumitomo Corp ADR is currently generating about -0.03 per unit of volatility. If you would invest 2,337 in Sumitomo Corp ADR on January 13, 2025 and sell it today you would lose (74.00) from holding Sumitomo Corp ADR or give up 3.17% 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. Sumitomo Corp ADR
Performance |
| Timeline |
| CK Hutchison Holdings |
| Sumitomo Corp ADR |
CK Hutchison and Sumitomo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CK Hutchison and Sumitomo Corp
The main advantage of trading using opposite CK Hutchison and Sumitomo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CK Hutchison position performs unexpectedly, Sumitomo Corp 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 Sumitomo Corp will offset losses from the drop in Sumitomo Corp's long position.| CK Hutchison vs. Grupo Bimbo SAB | CK Hutchison vs. Grupo Financiero Inbursa | CK Hutchison vs. Arca Continental SAB | CK Hutchison vs. Becle SA de |
| Sumitomo Corp vs. Itochu Corp ADR | Sumitomo Corp vs. Mitsubishi Corp | Sumitomo Corp vs. ITOCHU | Sumitomo Corp vs. Marubeni Corp ADR |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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