Correlation Between CK Hutchison and Valmont Industries

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

Diversification Opportunities for CK Hutchison and Valmont Industries

-0.36

Correlation Coefficient

CK Hutchison  Valmont Industries

Very good diversification

The 3 months correlation between CKHUF and Valmont is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CK Hutchison Holdings and Valmont Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valmont Industries 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 Valmont Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valmont Industries has no effect on the direction of CK Hutchison i.e., CK Hutchison and Valmont Industries go up and down completely randomly.

Pair Corralation between CK Hutchison and Valmont Industries

Assuming the 90 days horizon CK Hutchison Holdings is expected to generate 1.2 times more return on investment than Valmont Industries. However, CK Hutchison is 1.2 times more volatile than Valmont Industries. It trades about 0.06 of its potential returns per unit of risk. Valmont Industries is currently generating about -0.01 per unit of risk. If you would invest  538.00  in CK Hutchison Holdings on December 28, 2024 and sell it today you would earn a total of  52.00  from holding CK Hutchison Holdings or generate 9.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

CK Hutchison Holdings  vs.  Valmont Industries

CK Hutchison Holdings

Risk-Adjusted Performance

Insignificant

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

Valmont Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valmont Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Valmont Industries is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with CK Hutchison and Valmont Industries

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

The idea behind CK Hutchison Holdings and Valmont Industries 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..