Correlation Between CK Hutchison and Citic

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

Diversification Opportunities for CK Hutchison and Citic

0.58

Correlation Coefficient

CK Hutchison  Citic

Very weak diversification

The 3 months correlation between CKHUY and Citic is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CK Hutchison Holdings and Citic Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Ltd ADR 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 Citic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Ltd ADR has no effect on the direction of CK Hutchison i.e., CK Hutchison and Citic go up and down completely randomly.

Pair Corralation between CK Hutchison and Citic

Assuming the 90 days horizon CK Hutchison Holdings is expected to generate 0.96 times more return on investment than Citic. However, CK Hutchison Holdings is 1.05 times less risky than Citic. It trades about 0.07 of its potential returns per unit of risk. Citic Ltd ADR is currently generating about 0.03 per unit of risk. If you would invest  529.00  in CK Hutchison Holdings on December 28, 2024 and sell it today you would earn a total of  58.00  from holding CK Hutchison Holdings or generate 10.96% return on investment over 90 days.

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

CK Hutchison Holdings  vs.  Citic Ltd ADR

CK Hutchison Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CK Hutchison Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CK Hutchison showed solid returns over the last few months and may actually be approaching a breakup point.

Citic Ltd ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Ltd ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Citic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CK Hutchison and Citic

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

The idea behind CK Hutchison Holdings and Citic Ltd ADR 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.