Correlation Between Hutchison Telecommunicatio and TITAN MACHINERY

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

By analyzing existing cross correlation between Hutchison Telecommunications Hong and TITAN MACHINERY, you can compare the effects of market volatilities on Hutchison Telecommunicatio and TITAN MACHINERY 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 Hutchison Telecommunicatio with a short position of TITAN MACHINERY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hutchison Telecommunicatio and TITAN MACHINERY.

Diversification Opportunities for Hutchison Telecommunicatio and TITAN MACHINERY

0.16

Correlation Coefficient

Hutchison Telecommunicatio  TITAN MACHINERY

Average diversification

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

Pair Corralation between Hutchison Telecommunicatio and TITAN MACHINERY

Assuming the 90 days horizon Hutchison Telecommunicatio is expected to generate 1.63 times less return on investment than TITAN MACHINERY. In addition to that, Hutchison Telecommunicatio is 3.77 times more volatile than TITAN MACHINERY. It trades about 0.06 of its total potential returns per unit of risk. TITAN MACHINERY is currently generating about 0.34 per unit of volatility. If you would invest  1,260  in TITAN MACHINERY on October 23, 2024 and sell it today you would earn a total of  200.00  from holding TITAN MACHINERY or generate 15.87% return on investment over 90 days.

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

Hutchison Telecommunications H  vs.  TITAN MACHINERY

Hutchison Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hutchison Telecommunications Hong has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

TITAN MACHINERY

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TITAN MACHINERY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TITAN MACHINERY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hutchison Telecommunicatio and TITAN MACHINERY

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

The idea behind Hutchison Telecommunications Hong and TITAN MACHINERY 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.