Correlation Between People Infrastructure and Hutchison Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both People Infrastructure 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 People Infrastructure and Hutchison Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between People Infrastructure and Hutchison Telecommunications, you can compare the effects of market volatilities on People Infrastructure 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 People Infrastructure with a short position of Hutchison Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of People Infrastructure and Hutchison Telecommunicatio.
Diversification Opportunities for People Infrastructure and Hutchison Telecommunicatio
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between People and Hutchison is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding People Infrastructure and Hutchison Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hutchison Telecommunicatio and People Infrastructure 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 People Infrastructure 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 People Infrastructure i.e., People Infrastructure and Hutchison Telecommunicatio go up and down completely randomly.
Pair Corralation between People Infrastructure and Hutchison Telecommunicatio
Assuming the 90 days trading horizon People Infrastructure is expected to generate 0.65 times more return on investment than Hutchison Telecommunicatio. However, People Infrastructure is 1.54 times less risky than Hutchison Telecommunicatio. It trades about 0.38 of its potential returns per unit of risk. Hutchison Telecommunications is currently generating about -0.16 per unit of risk. If you would invest 76.00 in People Infrastructure on September 4, 2024 and sell it today you would earn a total of 18.00 from holding People Infrastructure or generate 23.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
People Infrastructure vs. Hutchison Telecommunications
Performance |
| Timeline |
| People Infrastructure |
| Hutchison Telecommunicatio |
People Infrastructure and Hutchison Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with People Infrastructure and Hutchison Telecommunicatio
The main advantage of trading using opposite People Infrastructure and Hutchison Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if People Infrastructure 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.| People Infrastructure vs. Hutchison Telecommunications | People Infrastructure vs. ARN Media Limited | People Infrastructure vs. Seven West Media | People Infrastructure vs. Queste Communications |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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