Correlation Between CK Hutchison and San Miguel

Can any of the company-specific risk be diversified away by investing in both CK Hutchison and San Miguel 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 San Miguel 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 San Miguel, you can compare the effects of market volatilities on CK Hutchison and San Miguel 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 San Miguel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK Hutchison and San Miguel.

Diversification Opportunities for CK Hutchison and San Miguel

0.39

Correlation Coefficient

CK Hutchison  San Miguel

Weak diversification

The 3 months correlation between CKHUF and San is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CK Hutchison Holdings and San Miguel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Miguel 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 San Miguel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Miguel has no effect on the direction of CK Hutchison i.e., CK Hutchison and San Miguel go up and down completely randomly.

Pair Corralation between CK Hutchison and San Miguel

Assuming the 90 days horizon CK Hutchison is expected to generate 39.58 times less return on investment than San Miguel. But when comparing it to its historical volatility, CK Hutchison Holdings is 2.58 times less risky than San Miguel. It trades about 0.0 of its potential returns per unit of risk. San Miguel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  145.00  in San Miguel on September 1, 2024 and sell it today you would earn a total of  17.00  from holding San Miguel or generate 11.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

CK Hutchison Holdings  vs.  San Miguel

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.

San Miguel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in San Miguel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, San Miguel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CK Hutchison and San Miguel

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

The idea behind CK Hutchison Holdings and San Miguel 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.