Correlation Between HUTCHISON TELECOMM and NH HOTEL

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

By analyzing existing cross correlation between HUTCHISON TELECOMM and NH HOTEL GROUP, you can compare the effects of market volatilities on HUTCHISON TELECOMM and NH HOTEL 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 NH HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUTCHISON TELECOMM and NH HOTEL.

Diversification Opportunities for HUTCHISON TELECOMM and NH HOTEL

0.09

Correlation Coefficient

HUTCHISON TELECOMM  NH HOTEL

Significant diversification

The 3 months correlation between HUTCHISON and NH5 is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHISON TELECOMM and NH HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH HOTEL GROUP 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 NH HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH HOTEL GROUP has no effect on the direction of HUTCHISON TELECOMM i.e., HUTCHISON TELECOMM and NH HOTEL go up and down completely randomly.

Pair Corralation between HUTCHISON TELECOMM and NH HOTEL

Assuming the 90 days trading horizon HUTCHISON TELECOMM is expected to generate 2.81 times less return on investment than NH HOTEL. In addition to that, HUTCHISON TELECOMM is 1.66 times more volatile than NH HOTEL GROUP. It trades about 0.01 of its total potential returns per unit of risk. NH HOTEL GROUP is currently generating about 0.06 per unit of volatility. If you would invest  407.00  in NH HOTEL GROUP on October 9, 2024 and sell it today you would earn a total of  213.00  from holding NH HOTEL GROUP or generate 52.33% 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.  NH HOTEL GROUP

HUTCHISON TELECOMM

Risk-Adjusted Performance

0 of 100

Very 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.

NH HOTEL GROUP

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NH HOTEL GROUP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NH HOTEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUTCHISON TELECOMM and NH HOTEL

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

The idea behind HUTCHISON TELECOMM and NH HOTEL GROUP 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.