Correlation Between Entravision Communications and HUTCHISON TELECOMM

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

By analyzing existing cross correlation between Entravision Communications and HUTCHISON TELECOMM, you can compare the effects of market volatilities on Entravision Communications and HUTCHISON TELECOMM 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 Entravision Communications with a short position of HUTCHISON TELECOMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and HUTCHISON TELECOMM.

Diversification Opportunities for Entravision Communications and HUTCHISON TELECOMM

-0.19

Correlation Coefficient

Entravision Communications  HUTCHISON TELECOMM

Good diversification

The 3 months correlation between Entravision and HUTCHISON is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and HUTCHISON TELECOMM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHISON TELECOMM and Entravision Communications 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 Entravision Communications are associated (or correlated) with HUTCHISON TELECOMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUTCHISON TELECOMM has no effect on the direction of Entravision Communications i.e., Entravision Communications and HUTCHISON TELECOMM go up and down completely randomly.

Pair Corralation between Entravision Communications and HUTCHISON TELECOMM

Assuming the 90 days horizon Entravision Communications is expected to under-perform the HUTCHISON TELECOMM. But the stock apears to be less risky and, when comparing its historical volatility, Entravision Communications is 1.4 times less risky than HUTCHISON TELECOMM. The stock trades about -0.01 of its potential returns per unit of risk. The HUTCHISON TELECOMM is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3.30  in HUTCHISON TELECOMM on October 8, 2024 and sell it today you would lose (1.85) from holding HUTCHISON TELECOMM or give up 56.06% of portfolio value over 90 days.

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

Entravision Communications  vs.  HUTCHISON TELECOMM

Entravision Communications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Entravision Communications reported solid returns over the last few months and may actually be approaching a breakup point.

HUTCHISON TELECOMM

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUTCHISON TELECOMM are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, HUTCHISON TELECOMM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Entravision Communications and HUTCHISON TELECOMM

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

The idea behind Entravision Communications and HUTCHISON TELECOMM 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.