Correlation Between SERI INDUSTRIAL and HUTCHISON TELECOMM
Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL and HUTCHISON TELECOMM 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 SERI INDUSTRIAL and HUTCHISON TELECOMM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SERI INDUSTRIAL EO and HUTCHISON TELECOMM, you can compare the effects of market volatilities on SERI INDUSTRIAL and HUTCHISON TELECOMM 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 SERI INDUSTRIAL with a short position of HUTCHISON TELECOMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and HUTCHISON TELECOMM.
Diversification Opportunities for SERI INDUSTRIAL and HUTCHISON TELECOMM
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between SERI and HUTCHISON is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and HUTCHISON TELECOMM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHISON TELECOMM and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO are associated (or correlated) with HUTCHISON TELECOMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUTCHISON TELECOMM has no effect on the direction of SERI INDUSTRIAL i.e., SERI INDUSTRIAL and HUTCHISON TELECOMM go up and down completely randomly.
Pair Corralation between SERI INDUSTRIAL and HUTCHISON TELECOMM
Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to under-perform the HUTCHISON TELECOMM. But the stock apears to be less risky and, when comparing its historical volatility, SERI INDUSTRIAL EO is 2.04 times less risky than HUTCHISON TELECOMM. The stock trades about -0.17 of its potential returns per unit of risk. The HUTCHISON TELECOMM is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1.40 in HUTCHISON TELECOMM on November 3, 2024 and sell it today you would earn a total of 0.00 from holding HUTCHISON TELECOMM or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SERI INDUSTRIAL EO vs. HUTCHISON TELECOMM
Performance |
| Timeline |
| SERI INDUSTRIAL EO |
| HUTCHISON TELECOMM |
SERI INDUSTRIAL and HUTCHISON TELECOMM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERI INDUSTRIAL and HUTCHISON TELECOMM
The main advantage of trading using opposite SERI INDUSTRIAL and HUTCHISON TELECOMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL position performs unexpectedly, HUTCHISON TELECOMM 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 TELECOMM will offset losses from the drop in HUTCHISON TELECOMM's long position.| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc |
| HUTCHISON TELECOMM vs. Apple Inc | HUTCHISON TELECOMM vs. Apple Inc | HUTCHISON TELECOMM vs. Apple Inc | HUTCHISON TELECOMM vs. Apple Inc |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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