Correlation Between Agro Capital and CK Hutchison

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

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

Diversification Opportunities for Agro Capital and CK Hutchison

-0.08

Correlation Coefficient

Agro Capital  CK Hutchison

Good diversification

The 3 months correlation between Agro and CKHUY is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Agro Capital Management 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 Agro Capital 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 Agro Capital Management 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 Agro Capital i.e., Agro Capital and CK Hutchison go up and down completely randomly.

Pair Corralation between Agro Capital and CK Hutchison

Given the investment horizon of 90 days Agro Capital Management is expected to generate 12.34 times more return on investment than CK Hutchison. However, Agro Capital is 12.34 times more volatile than CK Hutchison Holdings. It trades about 0.09 of its potential returns per unit of risk. CK Hutchison Holdings is currently generating about 0.03 per unit of risk. If you would invest  2.25  in Agro Capital Management on September 12, 2024 and sell it today you would lose (0.03) from holding Agro Capital Management or give up 1.33% of portfolio value over 90 days.

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

Agro Capital Management  vs.  CK Hutchison Holdings

Agro Capital Management

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agro Capital Management are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Agro Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

CK Hutchison Holdings

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CK Hutchison Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, CK Hutchison is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Agro Capital and CK Hutchison

The main advantage of trading using opposite Agro Capital and CK Hutchison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agro Capital 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 Agro Capital Management 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.