Correlation Between National Australia and Hutchison Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both National Australia 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 National Australia and Hutchison Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Australia Bank and Hutchison Telecommunications, you can compare the effects of market volatilities on National Australia 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 National Australia with a short position of Hutchison Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Hutchison Telecommunicatio.
Diversification Opportunities for National Australia and Hutchison Telecommunicatio
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Hutchison is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Hutchison Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hutchison Telecommunicatio and National Australia 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 National Australia Bank 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 National Australia i.e., National Australia and Hutchison Telecommunicatio go up and down completely randomly.
Pair Corralation between National Australia and Hutchison Telecommunicatio
Assuming the 90 days trading horizon National Australia is expected to generate 6.57 times less return on investment than Hutchison Telecommunicatio. But when comparing it to its historical volatility, National Australia Bank is 17.35 times less risky than Hutchison Telecommunicatio. It trades about 0.09 of its potential returns per unit of risk. Hutchison Telecommunications is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2.70 in Hutchison Telecommunications on September 26, 2024 and sell it today you would earn a total of 0.10 from holding Hutchison Telecommunications or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Hutchison Telecommunications
Performance |
| Timeline |
| National Australia Bank |
| Hutchison Telecommunicatio |
National Australia and Hutchison Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Hutchison Telecommunicatio
The main advantage of trading using opposite National Australia and Hutchison Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia 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.| National Australia vs. Westpac Banking | National Australia vs. Commonwealth Bank | National Australia vs. Commonwealth Bank of | National Australia vs. Commonwealth Bank of |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |