Correlation Between GLOBUS MEDICAL-A and HUTCHISON TELECOMM

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

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

Diversification Opportunities for GLOBUS MEDICAL-A and HUTCHISON TELECOMM

-0.23

Correlation Coefficient

GLOBUS MEDICAL-A  HUTCHISON TELECOMM

Very good diversification

The 3 months correlation between GLOBUS and HUTCHISON is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and HUTCHISON TELECOMM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHISON TELECOMM and GLOBUS MEDICAL-A 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 GLOBUS MEDICAL A 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 GLOBUS MEDICAL-A i.e., GLOBUS MEDICAL-A and HUTCHISON TELECOMM go up and down completely randomly.

Pair Corralation between GLOBUS MEDICAL-A and HUTCHISON TELECOMM

Assuming the 90 days trading horizon GLOBUS MEDICAL A is expected to generate 0.59 times more return on investment than HUTCHISON TELECOMM. However, GLOBUS MEDICAL A is 1.69 times less risky than HUTCHISON TELECOMM. It trades about 0.18 of its potential returns per unit of risk. HUTCHISON TELECOMM is currently generating about 0.0 per unit of risk. If you would invest  6,350  in GLOBUS MEDICAL A on October 11, 2024 and sell it today you would earn a total of  1,700  from holding GLOBUS MEDICAL A or generate 26.77% return on investment over 90 days.

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

GLOBUS MEDICAL A  vs.  HUTCHISON TELECOMM

GLOBUS MEDICAL A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GLOBUS MEDICAL-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

HUTCHISON TELECOMM

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days HUTCHISON TELECOMM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, HUTCHISON TELECOMM is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GLOBUS MEDICAL-A and HUTCHISON TELECOMM

The main advantage of trading using opposite GLOBUS MEDICAL-A and HUTCHISON TELECOMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLOBUS MEDICAL-A 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 GLOBUS MEDICAL A 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.