Correlation Between Hutchison Telecommunicatio and Boss Energy

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

By analyzing existing cross correlation between Hutchison Telecommunications and Boss Energy Limited, you can compare the effects of market volatilities on Hutchison Telecommunicatio and Boss Energy 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 Boss Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hutchison Telecommunicatio and Boss Energy.

Diversification Opportunities for Hutchison Telecommunicatio and Boss Energy

0.27

Correlation Coefficient

Hutchison Telecommunicatio  Boss Energy

Modest diversification

The 3 months correlation between Hutchison and Boss is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hutchison Telecommunications and Boss Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boss Energy Limited 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 Boss Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boss Energy Limited has no effect on the direction of Hutchison Telecommunicatio i.e., Hutchison Telecommunicatio and Boss Energy go up and down completely randomly.

Pair Corralation between Hutchison Telecommunicatio and Boss Energy

Assuming the 90 days trading horizon Hutchison Telecommunications is expected to under-perform the Boss Energy. In addition to that, Hutchison Telecommunicatio is 1.14 times more volatile than Boss Energy Limited. It trades about 0.0 of its total potential returns per unit of risk. Boss Energy Limited is currently generating about 0.08 per unit of volatility. If you would invest  236.00  in Boss Energy Limited on December 21, 2024 and sell it today you would earn a total of  34.00  from holding Boss Energy Limited or generate 14.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Hutchison Telecommunications  vs.  Boss Energy Limited

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.

Boss Energy Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boss Energy Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Boss Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hutchison Telecommunicatio and Boss Energy

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

The idea behind Hutchison Telecommunications and Boss Energy Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.