Correlation Between Hutchison Telecommunicatio and Allegiance Coal

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

By analyzing existing cross correlation between Hutchison Telecommunications and Allegiance Coal, you can compare the effects of market volatilities on Hutchison Telecommunicatio and Allegiance Coal 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 Hutchison Telecommunicatio with a short position of Allegiance Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hutchison Telecommunicatio and Allegiance Coal.

Diversification Opportunities for Hutchison Telecommunicatio and Allegiance Coal

0.0

Correlation Coefficient

Hutchison Telecommunicatio  Allegiance Coal

Pay attention - limited upside

The 3 months correlation between Hutchison and Allegiance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hutchison Telecommunications and Allegiance Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiance Coal and Hutchison Telecommunicatio 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 Hutchison Telecommunications are associated (or correlated) with Allegiance Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegiance Coal has no effect on the direction of Hutchison Telecommunicatio i.e., Hutchison Telecommunicatio and Allegiance Coal go up and down completely randomly.

Pair Corralation between Hutchison Telecommunicatio and Allegiance Coal

If you would invest (100.00) in Allegiance Coal on December 23, 2024 and sell it today you would earn a total of  100.00  from holding Allegiance Coal or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Hutchison Telecommunications  vs.  Allegiance Coal

Hutchison Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hutchison Telecommunications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hutchison Telecommunicatio is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Allegiance Coal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allegiance Coal has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Allegiance Coal is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Hutchison Telecommunicatio and Allegiance Coal

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

The idea behind Hutchison Telecommunications and Allegiance Coal 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.