Correlation Between Pacific Basin and Hutchison Port
Can any of the company-specific risk be diversified away by investing in both Pacific Basin and Hutchison Port 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 Pacific Basin and Hutchison Port into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Basin Shipping and Hutchison Port Holdings, you can compare the effects of market volatilities on Pacific Basin and Hutchison Port 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 Pacific Basin with a short position of Hutchison Port. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Basin and Hutchison Port.
Diversification Opportunities for Pacific Basin and Hutchison Port
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pacific and Hutchison is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Basin Shipping and Hutchison Port Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hutchison Port Holdings and Pacific Basin 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 Pacific Basin Shipping are associated (or correlated) with Hutchison Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hutchison Port Holdings has no effect on the direction of Pacific Basin i.e., Pacific Basin and Hutchison Port go up and down completely randomly.
Pair Corralation between Pacific Basin and Hutchison Port
Assuming the 90 days horizon Pacific Basin Shipping is expected to under-perform the Hutchison Port. But the pink sheet apears to be less risky and, when comparing its historical volatility, Pacific Basin Shipping is 1.19 times less risky than Hutchison Port. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Hutchison Port Holdings is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 282.00 in Hutchison Port Holdings on August 31, 2024 and sell it today you would earn a total of 63.00 from holding Hutchison Port Holdings or generate 22.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Basin Shipping vs. Hutchison Port Holdings
Performance |
| Timeline |
| Pacific Basin Shipping |
| Hutchison Port Holdings |
Pacific Basin and Hutchison Port Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Basin and Hutchison Port
The main advantage of trading using opposite Pacific Basin and Hutchison Port positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Basin position performs unexpectedly, Hutchison Port 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 Port will offset losses from the drop in Hutchison Port's long position.| Pacific Basin vs. Kawasaki Kisen Kaisha | Pacific Basin vs. Hapag Lloyd Aktiengesellschaft | Pacific Basin vs. Hapag Lloyd Aktiengesellschaft | Pacific Basin vs. SITC International Holdings |
| Hutchison Port vs. Kawasaki Kisen Kaisha | Hutchison Port vs. MPC Container Ships | Hutchison Port vs. Hapag Lloyd Aktiengesellschaft | Hutchison Port vs. Mitsui OSK Lines |
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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