Correlation Between Hutchison Telecommunicatio and Wesfarmers
Can any of the company-specific risk be diversified away by investing in both Hutchison Telecommunicatio and Wesfarmers 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 Hutchison Telecommunicatio and Wesfarmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hutchison Telecommunications and Wesfarmers, you can compare the effects of market volatilities on Hutchison Telecommunicatio and Wesfarmers 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 Hutchison Telecommunicatio with a short position of Wesfarmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hutchison Telecommunicatio and Wesfarmers.
Diversification Opportunities for Hutchison Telecommunicatio and Wesfarmers
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hutchison and Wesfarmers is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hutchison Telecommunications and Wesfarmers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesfarmers and Hutchison Telecommunicatio 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 Hutchison Telecommunications are associated (or correlated) with Wesfarmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesfarmers has no effect on the direction of Hutchison Telecommunicatio i.e., Hutchison Telecommunicatio and Wesfarmers go up and down completely randomly.
Pair Corralation between Hutchison Telecommunicatio and Wesfarmers
Assuming the 90 days trading horizon Hutchison Telecommunications is expected to under-perform the Wesfarmers. In addition to that, Hutchison Telecommunicatio is 4.77 times more volatile than Wesfarmers. It trades about 0.0 of its total potential returns per unit of risk. Wesfarmers is currently generating about 0.09 per unit of volatility. If you would invest 4,559 in Wesfarmers on October 7, 2024 and sell it today you would earn a total of 2,622 from holding Wesfarmers or generate 57.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hutchison Telecommunications vs. Wesfarmers
Performance |
| Timeline |
| Hutchison Telecommunicatio |
| Wesfarmers |
Hutchison Telecommunicatio and Wesfarmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hutchison Telecommunicatio and Wesfarmers
The main advantage of trading using opposite Hutchison Telecommunicatio and Wesfarmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hutchison Telecommunicatio position performs unexpectedly, Wesfarmers 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 Wesfarmers will offset losses from the drop in Wesfarmers' long position.| Hutchison Telecommunicatio vs. Aneka Tambang Tbk | Hutchison Telecommunicatio vs. Macquarie Group Ltd | Hutchison Telecommunicatio vs. BHP Group Limited | Hutchison Telecommunicatio vs. Block Inc |
| Wesfarmers vs. Ras Technology Holdings | Wesfarmers vs. Zoom2u Technologies | Wesfarmers vs. Ambertech | Wesfarmers vs. Queste Communications |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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