Correlation Between Gold Road and Hutchison Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Gold Road 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 Gold Road and Hutchison Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Road Resources and Hutchison Telecommunications, you can compare the effects of market volatilities on Gold Road 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 Gold Road with a short position of Hutchison Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Hutchison Telecommunicatio.
Diversification Opportunities for Gold Road and Hutchison Telecommunicatio
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gold and Hutchison is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Hutchison Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hutchison Telecommunicatio and Gold Road 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 Gold Road Resources 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 Gold Road i.e., Gold Road and Hutchison Telecommunicatio go up and down completely randomly.
Pair Corralation between Gold Road and Hutchison Telecommunicatio
Assuming the 90 days trading horizon Gold Road Resources is expected to generate 0.64 times more return on investment than Hutchison Telecommunicatio. However, Gold Road Resources is 1.57 times less risky than Hutchison Telecommunicatio. It trades about -0.03 of its potential returns per unit of risk. Hutchison Telecommunications is currently generating about -0.07 per unit of risk. If you would invest 195.00 in Gold Road Resources on August 26, 2024 and sell it today you would lose (4.00) from holding Gold Road Resources or give up 2.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Hutchison Telecommunications
Performance |
| Timeline |
| Gold Road Resources |
| Hutchison Telecommunicatio |
Gold Road and Hutchison Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Hutchison Telecommunicatio
The main advantage of trading using opposite Gold Road and Hutchison Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road 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.| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Bluescope Steel | Gold Road vs. Sandfire Resources NL |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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