Correlation Between CDN IMPERIAL and HUTCHISON TELECOMM

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

By analyzing existing cross correlation between CDN IMPERIAL BANK and HUTCHISON TELECOMM, you can compare the effects of market volatilities on CDN IMPERIAL and HUTCHISON TELECOMM 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 CDN IMPERIAL with a short position of HUTCHISON TELECOMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and HUTCHISON TELECOMM.

Diversification Opportunities for CDN IMPERIAL and HUTCHISON TELECOMM

0.89

Correlation Coefficient

CDN IMPERIAL  HUTCHISON TELECOMM

Very poor diversification

The 3 months correlation between CDN and HUTCHISON is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and HUTCHISON TELECOMM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHISON TELECOMM and CDN IMPERIAL 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 CDN IMPERIAL BANK are associated (or correlated) with HUTCHISON TELECOMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUTCHISON TELECOMM has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and HUTCHISON TELECOMM go up and down completely randomly.

Pair Corralation between CDN IMPERIAL and HUTCHISON TELECOMM

Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.37 times more return on investment than HUTCHISON TELECOMM. However, CDN IMPERIAL BANK is 2.7 times less risky than HUTCHISON TELECOMM. It trades about -0.15 of its potential returns per unit of risk. HUTCHISON TELECOMM is currently generating about -0.1 per unit of risk. If you would invest  6,025  in CDN IMPERIAL BANK on December 21, 2024 and sell it today you would lose (822.00) from holding CDN IMPERIAL BANK or give up 13.64% of portfolio value over 90 days.

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

CDN IMPERIAL BANK  vs.  HUTCHISON TELECOMM

CDN IMPERIAL BANK

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDN IMPERIAL BANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

HUTCHISON TELECOMM

Risk-Adjusted Performance

Very Weak

Over the last 90 days HUTCHISON TELECOMM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CDN IMPERIAL and HUTCHISON TELECOMM

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

The idea behind CDN IMPERIAL BANK and HUTCHISON TELECOMM 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.