Correlation Between CK Hutchison and Henderson Land

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

Diversification Opportunities for CK Hutchison and Henderson Land

0.42

Correlation Coefficient

CK Hutchison  Henderson Land

Very weak diversification

The 3 months correlation between CKHUY and Henderson is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CK Hutchison Holdings and Henderson Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson Land Devel 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 Henderson Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson Land Devel has no effect on the direction of CK Hutchison i.e., CK Hutchison and Henderson Land go up and down completely randomly.

Pair Corralation between CK Hutchison and Henderson Land

Assuming the 90 days horizon CK Hutchison Holdings is expected to under-perform the Henderson Land. But the pink sheet apears to be less risky and, when comparing its historical volatility, CK Hutchison Holdings is 1.62 times less risky than Henderson Land. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Henderson Land Development is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  295.00  in Henderson Land Development on September 3, 2024 and sell it today you would earn a total of  14.00  from holding Henderson Land Development or generate 4.75% 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.  Henderson Land Development

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. In spite of fairly strong basic indicators, CK Hutchison is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Henderson Land Devel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Henderson Land Development are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Henderson Land may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CK Hutchison and Henderson Land

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

The idea behind CK Hutchison Holdings and Henderson Land Development 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.