Correlation Between Hutchison Telecommunicatio and Gtn

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

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

Diversification Opportunities for Hutchison Telecommunicatio and Gtn

-0.27

Correlation Coefficient

Hutchison Telecommunicatio  Gtn

Very good diversification

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

Pair Corralation between Hutchison Telecommunicatio and Gtn

Assuming the 90 days trading horizon Hutchison Telecommunicatio is expected to generate 4.41 times less return on investment than Gtn. In addition to that, Hutchison Telecommunicatio is 1.36 times more volatile than Gtn. It trades about 0.02 of its total potential returns per unit of risk. Gtn is currently generating about 0.13 per unit of volatility. If you would invest  39.00  in Gtn on September 28, 2024 and sell it today you would earn a total of  19.00  from holding Gtn or generate 48.72% return on investment over 90 days.

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

Hutchison Telecommunications  vs.  Gtn

Hutchison Telecommunicatio

Risk-Adjusted Performance

2 of 100

Weak

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

Gtn

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gtn are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Gtn unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hutchison Telecommunicatio and Gtn

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

The idea behind Hutchison Telecommunications and Gtn 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.