Correlation Between G8 Education and Hutchison Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both G8 Education and Hutchison Telecommunicatio 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 G8 Education and Hutchison Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 Education and Hutchison Telecommunications, you can compare the effects of market volatilities on G8 Education and Hutchison Telecommunicatio 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 G8 Education with a short position of Hutchison Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 Education and Hutchison Telecommunicatio.
Diversification Opportunities for G8 Education and Hutchison Telecommunicatio
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GEM and Hutchison is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding G8 Education and Hutchison Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hutchison Telecommunicatio and G8 Education 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 G8 Education are associated (or correlated) with Hutchison Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hutchison Telecommunicatio has no effect on the direction of G8 Education i.e., G8 Education and Hutchison Telecommunicatio go up and down completely randomly.
Pair Corralation between G8 Education and Hutchison Telecommunicatio
Assuming the 90 days trading horizon G8 Education is expected to generate 0.35 times more return on investment than Hutchison Telecommunicatio. However, G8 Education is 2.82 times less risky than Hutchison Telecommunicatio. It trades about 0.07 of its potential returns per unit of risk. Hutchison Telecommunications is currently generating about -0.02 per unit of risk. If you would invest 119.00 in G8 Education on August 29, 2024 and sell it today you would earn a total of 15.00 from holding G8 Education or generate 12.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G8 Education vs. Hutchison Telecommunications
Performance |
| Timeline |
| G8 Education |
| Hutchison Telecommunicatio |
G8 Education and Hutchison Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G8 Education and Hutchison Telecommunicatio
The main advantage of trading using opposite G8 Education and Hutchison Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 Education position performs unexpectedly, Hutchison Telecommunicatio 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 Hutchison Telecommunicatio will offset losses from the drop in Hutchison Telecommunicatio's long position.| G8 Education vs. Summit Resources Limited | G8 Education vs. Champion Iron | G8 Education vs. Ridley | G8 Education vs. Peel Mining |
| Hutchison Telecommunicatio vs. PVW Resources | Hutchison Telecommunicatio vs. Woolworths | Hutchison Telecommunicatio vs. Wesfarmers | Hutchison Telecommunicatio vs. Coles Group |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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