Correlation Between CK HUTCHISON and Mitsubishi

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

By analyzing existing cross correlation between CK HUTCHISON HLDGS and Mitsubishi, you can compare the effects of market volatilities on CK HUTCHISON and Mitsubishi 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 Mitsubishi. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK HUTCHISON and Mitsubishi.

Diversification Opportunities for CK HUTCHISON and Mitsubishi

0.43

Correlation Coefficient

CK HUTCHISON  Mitsubishi

Very weak diversification

The 3 months correlation between 2CKA and Mitsubishi is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CK HUTCHISON HLDGS and Mitsubishi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi 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 HLDGS are associated (or correlated) with Mitsubishi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi has no effect on the direction of CK HUTCHISON i.e., CK HUTCHISON and Mitsubishi go up and down completely randomly.

Pair Corralation between CK HUTCHISON and Mitsubishi

Assuming the 90 days trading horizon CK HUTCHISON HLDGS is expected to generate 0.59 times more return on investment than Mitsubishi. However, CK HUTCHISON HLDGS is 1.7 times less risky than Mitsubishi. It trades about 0.17 of its potential returns per unit of risk. Mitsubishi is currently generating about -0.18 per unit of risk. If you would invest  458.00  in CK HUTCHISON HLDGS on September 23, 2024 and sell it today you would earn a total of  16.00  from holding CK HUTCHISON HLDGS or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CK HUTCHISON HLDGS  vs.  Mitsubishi

CK HUTCHISON HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CK HUTCHISON HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, CK HUTCHISON is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Mitsubishi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsubishi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CK HUTCHISON and Mitsubishi

The main advantage of trading using opposite CK HUTCHISON and Mitsubishi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CK HUTCHISON position performs unexpectedly, Mitsubishi 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 Mitsubishi will offset losses from the drop in Mitsubishi's long position.

The idea behind CK HUTCHISON HLDGS and Mitsubishi 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.