Correlation Between WisdomTree Investments and HUTCHISON TELECOMM

Can any of the company-specific risk be diversified away by investing in both WisdomTree Investments 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 WisdomTree Investments and HUTCHISON TELECOMM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WisdomTree Investments and HUTCHISON TELECOMM, you can compare the effects of market volatilities on WisdomTree Investments 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 WisdomTree Investments with a short position of HUTCHISON TELECOMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Investments and HUTCHISON TELECOMM.

Diversification Opportunities for WisdomTree Investments and HUTCHISON TELECOMM

-0.33

Correlation Coefficient

WisdomTree Investments  HUTCHISON TELECOMM

Very good diversification

The 3 months correlation between WisdomTree and HUTCHISON is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments and HUTCHISON TELECOMM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHISON TELECOMM and WisdomTree Investments 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 WisdomTree Investments 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 WisdomTree Investments i.e., WisdomTree Investments and HUTCHISON TELECOMM go up and down completely randomly.

Pair Corralation between WisdomTree Investments and HUTCHISON TELECOMM

Assuming the 90 days horizon WisdomTree Investments is expected to under-perform the HUTCHISON TELECOMM. But the stock apears to be less risky and, when comparing its historical volatility, WisdomTree Investments is 2.0 times less risky than HUTCHISON TELECOMM. The stock trades about -0.31 of its potential returns per unit of risk. The HUTCHISON TELECOMM is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.35  in HUTCHISON TELECOMM on October 11, 2024 and sell it today you would earn a total of  0.05  from holding HUTCHISON TELECOMM or generate 3.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

WisdomTree Investments  vs.  HUTCHISON TELECOMM

WisdomTree Investments

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, WisdomTree Investments reported solid returns over the last few months and may actually be approaching a breakup point.

HUTCHISON TELECOMM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUTCHISON TELECOMM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, HUTCHISON TELECOMM is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WisdomTree Investments and HUTCHISON TELECOMM

The main advantage of trading using opposite WisdomTree Investments and HUTCHISON TELECOMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Investments 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.

The idea behind WisdomTree Investments and HUTCHISON TELECOMM pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.