Correlation Between HUTCHISON TELECOMM and Christian Dior

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

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

Diversification Opportunities for HUTCHISON TELECOMM and Christian Dior

0.14

Correlation Coefficient

HUTCHISON TELECOMM  Christian Dior

Average diversification

The 3 months correlation between HUTCHISON and Christian is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHISON TELECOMM and Christian Dior SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Christian Dior SE and HUTCHISON TELECOMM 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 TELECOMM are associated (or correlated) with Christian Dior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Christian Dior SE has no effect on the direction of HUTCHISON TELECOMM i.e., HUTCHISON TELECOMM and Christian Dior go up and down completely randomly.

Pair Corralation between HUTCHISON TELECOMM and Christian Dior

Assuming the 90 days trading horizon HUTCHISON TELECOMM is expected to generate 2.25 times more return on investment than Christian Dior. However, HUTCHISON TELECOMM is 2.25 times more volatile than Christian Dior SE. It trades about 0.03 of its potential returns per unit of risk. Christian Dior SE is currently generating about -0.02 per unit of risk. If you would invest  1.40  in HUTCHISON TELECOMM on October 8, 2024 and sell it today you would earn a total of  0.05  from holding HUTCHISON TELECOMM or generate 3.57% return on investment over 90 days.

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

HUTCHISON TELECOMM  vs.  Christian Dior SE

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 fragile basic indicators, HUTCHISON TELECOMM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Christian Dior SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Christian Dior SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Christian Dior is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HUTCHISON TELECOMM and Christian Dior

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

The idea behind HUTCHISON TELECOMM and Christian Dior SE 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.