Correlation Between Midway and Hutchison Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Midway 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 Midway and Hutchison Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midway and Hutchison Telecommunications, you can compare the effects of market volatilities on Midway 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 Midway with a short position of Hutchison Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midway and Hutchison Telecommunicatio.
Diversification Opportunities for Midway and Hutchison Telecommunicatio
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Midway and Hutchison is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Midway and Hutchison Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hutchison Telecommunicatio and Midway 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 Midway 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 Midway i.e., Midway and Hutchison Telecommunicatio go up and down completely randomly.
Pair Corralation between Midway and Hutchison Telecommunicatio
Assuming the 90 days trading horizon Midway is expected to generate 5.48 times more return on investment than Hutchison Telecommunicatio. However, Midway is 5.48 times more volatile than Hutchison Telecommunications. It trades about 0.21 of its potential returns per unit of risk. Hutchison Telecommunications is currently generating about 0.01 per unit of risk. If you would invest 77.00 in Midway on September 13, 2024 and sell it today you would earn a total of 47.00 from holding Midway or generate 61.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Midway vs. Hutchison Telecommunications
Performance |
| Timeline |
| Midway |
| Hutchison Telecommunicatio |
Midway and Hutchison Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midway and Hutchison Telecommunicatio
The main advantage of trading using opposite Midway and Hutchison Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midway 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.| Midway vs. Hutchison Telecommunications | Midway vs. Magellan Financial Group | Midway vs. The Environmental Group | Midway vs. Queste Communications |
| Hutchison Telecommunicatio vs. Super Retail Group | Hutchison Telecommunicatio vs. Perseus Mining | Hutchison Telecommunicatio vs. Retail Food Group | Hutchison Telecommunicatio vs. My Foodie Box |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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