Correlation Between Hutchison Port and SITC International

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

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

Diversification Opportunities for Hutchison Port and SITC International

-0.23

Correlation Coefficient

Hutchison Port  SITC International

Very good diversification

The 3 months correlation between Hutchison and SITC is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hutchison Port Holdings and SITC International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SITC International and Hutchison Port 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 Port Holdings are associated (or correlated) with SITC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SITC International has no effect on the direction of Hutchison Port i.e., Hutchison Port and SITC International go up and down completely randomly.

Pair Corralation between Hutchison Port and SITC International

Assuming the 90 days horizon Hutchison Port Holdings is expected to generate 2.13 times more return on investment than SITC International. However, Hutchison Port is 2.13 times more volatile than SITC International Holdings. It trades about 0.04 of its potential returns per unit of risk. SITC International Holdings is currently generating about 0.03 per unit of risk. If you would invest  355.00  in Hutchison Port Holdings on December 22, 2024 and sell it today you would earn a total of  19.00  from holding Hutchison Port Holdings or generate 5.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Hutchison Port Holdings  vs.  SITC International Holdings

Hutchison Port Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hutchison Port Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, Hutchison Port showed solid returns over the last few months and may actually be approaching a breakup point.

SITC International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SITC International Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, SITC International 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 Port and SITC International

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

The idea behind Hutchison Port Holdings and SITC International Holdings 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 Stocks Directory module to find actively traded stocks across global markets.