Correlation Between Citic and CK Hutchison

Can any of the company-specific risk be diversified away by investing in both Citic and CK Hutchison 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 Citic and CK Hutchison into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citic Ltd ADR and CK Hutchison Holdings, you can compare the effects of market volatilities on Citic and CK Hutchison 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 Citic with a short position of CK Hutchison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic and CK Hutchison.

Diversification Opportunities for Citic and CK Hutchison

0.58

Correlation Coefficient

Citic  CK Hutchison

Very weak diversification

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

Pair Corralation between Citic and CK Hutchison

Assuming the 90 days horizon Citic is expected to generate 1.98 times less return on investment than CK Hutchison. In addition to that, Citic is 1.05 times more volatile than CK Hutchison Holdings. It trades about 0.03 of its total potential returns per unit of risk. CK Hutchison Holdings is currently generating about 0.07 per unit of volatility. 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

Citic Ltd ADR  vs.  CK Hutchison Holdings

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.

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.

Pair Trading with Citic and CK Hutchison

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

The idea behind Citic Ltd ADR and CK Hutchison Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.