Correlation Between CK Hutchison and Sun Hung

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

Diversification Opportunities for CK Hutchison and Sun Hung

0.48

Correlation Coefficient

CK Hutchison  Sun Hung

Very weak diversification

The 3 months correlation between CKHUF and Sun is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CK Hutchison Holdings and Sun Hung Kai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Hung Kai 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 Sun Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Hung Kai has no effect on the direction of CK Hutchison i.e., CK Hutchison and Sun Hung go up and down completely randomly.

Pair Corralation between CK Hutchison and Sun Hung

Assuming the 90 days horizon CK Hutchison Holdings is expected to generate 2.77 times more return on investment than Sun Hung. However, CK Hutchison is 2.77 times more volatile than Sun Hung Kai. It trades about 0.03 of its potential returns per unit of risk. Sun Hung Kai is currently generating about -0.1 per unit of risk. If you would invest  495.00  in CK Hutchison Holdings on November 20, 2024 and sell it today you would earn a total of  10.00  from holding CK Hutchison Holdings or generate 2.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	77.97%
Values	Daily Returns

CK Hutchison Holdings  vs.  Sun Hung Kai

CK Hutchison Holdings

Risk-Adjusted Performance

Weak

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. Despite nearly fragile basic indicators, CK Hutchison may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Sun Hung Kai

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Hung Kai has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CK Hutchison and Sun Hung

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

The idea behind CK Hutchison Holdings and Sun Hung Kai 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.