Correlation Between CK Hutchison and Halma Plc

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

Diversification Opportunities for CK Hutchison and Halma Plc

0.34

Correlation Coefficient

CK Hutchison  Halma Plc

Weak diversification

The 3 months correlation between CKHUY and Halma is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CK Hutchison Holdings and Halma plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halma plc 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 Halma Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halma plc has no effect on the direction of CK Hutchison i.e., CK Hutchison and Halma Plc go up and down completely randomly.

Pair Corralation between CK Hutchison and Halma Plc

Assuming the 90 days horizon CK Hutchison Holdings is expected to under-perform the Halma Plc. But the pink sheet apears to be less risky and, when comparing its historical volatility, CK Hutchison Holdings is 1.96 times less risky than Halma Plc. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Halma plc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,354  in Halma plc on October 24, 2024 and sell it today you would earn a total of  120.00  from holding Halma plc or generate 3.58% return on investment over 90 days.

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

CK Hutchison Holdings  vs.  Halma plc

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Halma plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Halma plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Halma Plc may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CK Hutchison and Halma Plc

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

The idea behind CK Hutchison Holdings and Halma plc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.