Correlation Between CK Hutchison and Guidewire Software
Can any of the company-specific risk be diversified away by investing in both CK Hutchison and Guidewire Software 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 CK Hutchison and Guidewire Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CK Hutchison Holdings and Guidewire Software, you can compare the effects of market volatilities on CK Hutchison and Guidewire Software 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 CK Hutchison with a short position of Guidewire Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK Hutchison and Guidewire Software.
Diversification Opportunities for CK Hutchison and Guidewire Software
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 2CK and Guidewire is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CK Hutchison Holdings and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software and CK Hutchison 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 CK Hutchison Holdings are associated (or correlated) with Guidewire Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software has no effect on the direction of CK Hutchison i.e., CK Hutchison and Guidewire Software go up and down completely randomly.
Pair Corralation between CK Hutchison and Guidewire Software
Assuming the 90 days horizon CK Hutchison Holdings is expected to generate 0.48 times more return on investment than Guidewire Software. However, CK Hutchison Holdings is 2.1 times less risky than Guidewire Software. It trades about 0.09 of its potential returns per unit of risk. Guidewire Software is currently generating about -0.18 per unit of risk. If you would invest 486.00 in CK Hutchison Holdings on September 24, 2024 and sell it today you would earn a total of 16.00 from holding CK Hutchison Holdings or generate 3.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CK Hutchison Holdings vs. Guidewire Software
Performance |
Timeline |
CK Hutchison Holdings |
Guidewire Software |
CK Hutchison and Guidewire Software Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CK Hutchison and Guidewire Software
The main advantage of trading using opposite CK Hutchison and Guidewire Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CK Hutchison position performs unexpectedly, Guidewire Software 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 Guidewire Software will offset losses from the drop in Guidewire Software's long position.CK Hutchison vs. Guidewire Software | CK Hutchison vs. Mitsui Chemicals | CK Hutchison vs. Check Point Software | CK Hutchison vs. Take Two Interactive Software |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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