Correlation Between CK Hutchison and National Health

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

By analyzing existing cross correlation between CK Hutchison Holdings and National Health Scan, you can compare the effects of market volatilities on CK Hutchison and National Health 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 National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK Hutchison and National Health.

Diversification Opportunities for CK Hutchison and National Health

-0.15

Correlation Coefficient

CK Hutchison  National Health

Good diversification

The 3 months correlation between CKHUF and National is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CK Hutchison Holdings and National Health Scan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Scan 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 Holdings are associated (or correlated) with National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Scan has no effect on the direction of CK Hutchison i.e., CK Hutchison and National Health go up and down completely randomly.

Pair Corralation between CK Hutchison and National Health

Assuming the 90 days horizon CK Hutchison is expected to generate 307.57 times less return on investment than National Health. But when comparing it to its historical volatility, CK Hutchison Holdings is 9.02 times less risky than National Health. It trades about 0.0 of its potential returns per unit of risk. National Health Scan is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1.70  in National Health Scan on September 1, 2024 and sell it today you would earn a total of  0.60  from holding National Health Scan or generate 35.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

CK Hutchison Holdings  vs.  National Health Scan

CK Hutchison Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

National Health Scan

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Health Scan are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, National Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CK Hutchison and National Health

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

The idea behind CK Hutchison Holdings and National Health Scan 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.