Correlation Between PPHE HOTEL and CK Hutchison

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

By analyzing existing cross correlation between PPHE HOTEL GROUP and CK Hutchison Holdings, you can compare the effects of market volatilities on PPHE HOTEL and CK Hutchison 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 PPHE HOTEL with a short position of CK Hutchison. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE HOTEL and CK Hutchison.

Diversification Opportunities for PPHE HOTEL and CK Hutchison

-0.16

Correlation Coefficient

PPHE HOTEL  CK Hutchison

Good diversification

The 3 months correlation between PPHE and 2CK is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and CK Hutchison Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Hutchison Holdings and PPHE HOTEL 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 PPHE HOTEL GROUP are associated (or correlated) with CK Hutchison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Hutchison Holdings has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and CK Hutchison go up and down completely randomly.

Pair Corralation between PPHE HOTEL and CK Hutchison

Assuming the 90 days trading horizon PPHE HOTEL GROUP is expected to under-perform the CK Hutchison. But the stock apears to be less risky and, when comparing its historical volatility, PPHE HOTEL GROUP is 1.78 times less risky than CK Hutchison. The stock trades about -0.02 of its potential returns per unit of risk. The CK Hutchison Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  498.00  in CK Hutchison Holdings on December 18, 2024 and sell it today you would earn a total of  55.00  from holding CK Hutchison Holdings or generate 11.04% return on investment over 90 days.

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

PPHE HOTEL GROUP  vs.  CK Hutchison Holdings

PPHE HOTEL GROUP

Risk-Adjusted Performance

Very Weak

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

CK Hutchison Holdings

Risk-Adjusted Performance

Modest

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

Pair Trading with PPHE HOTEL and CK Hutchison

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

The idea behind PPHE HOTEL GROUP and CK Hutchison Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.