Correlation Between Westpac Banking and Hutchison Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Westpac Banking 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 Westpac Banking and Hutchison Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and Hutchison Telecommunications, you can compare the effects of market volatilities on Westpac Banking 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 Westpac Banking with a short position of Hutchison Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and Hutchison Telecommunicatio.
Diversification Opportunities for Westpac Banking and Hutchison Telecommunicatio
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westpac and Hutchison is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and Hutchison Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hutchison Telecommunicatio and Westpac Banking 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 Westpac Banking 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 Westpac Banking i.e., Westpac Banking and Hutchison Telecommunicatio go up and down completely randomly.
Pair Corralation between Westpac Banking and Hutchison Telecommunicatio
Assuming the 90 days trading horizon Westpac Banking is expected to generate 2.45 times less return on investment than Hutchison Telecommunicatio. But when comparing it to its historical volatility, Westpac Banking is 35.22 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 0.01 of returns per unit of risk over similar time horizon. If you would invest 4.20 in Hutchison Telecommunications on September 2, 2024 and sell it today you would lose (1.70) from holding Hutchison Telecommunications or give up 40.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westpac Banking vs. Hutchison Telecommunications
Performance |
| Timeline |
| Westpac Banking |
| Hutchison Telecommunicatio |
Westpac Banking and Hutchison Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and Hutchison Telecommunicatio
The main advantage of trading using opposite Westpac Banking and Hutchison Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking 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.| Westpac Banking vs. Spirit Telecom | Westpac Banking vs. Health and Plant | Westpac Banking vs. EVE Health Group | Westpac Banking vs. Advanced Braking Technology |
| Hutchison Telecommunicatio vs. Skycity Entertainment Group | Hutchison Telecommunicatio vs. Collins Foods | Hutchison Telecommunicatio vs. Gold Road Resources | Hutchison Telecommunicatio vs. Iron Road |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |