Correlation Between SPORT LISBOA and HUTCHISON TELECOMM

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

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

Diversification Opportunities for SPORT LISBOA and HUTCHISON TELECOMM

0.36

Correlation Coefficient

SPORT LISBOA  HUTCHISON TELECOMM

Weak diversification

The 3 months correlation between SPORT and HUTCHISON is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and HUTCHISON TELECOMM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHISON TELECOMM and SPORT LISBOA 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 SPORT LISBOA E are associated (or correlated) with HUTCHISON TELECOMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUTCHISON TELECOMM has no effect on the direction of SPORT LISBOA i.e., SPORT LISBOA and HUTCHISON TELECOMM go up and down completely randomly.

Pair Corralation between SPORT LISBOA and HUTCHISON TELECOMM

Assuming the 90 days horizon SPORT LISBOA E is expected to generate 0.41 times more return on investment than HUTCHISON TELECOMM. However, SPORT LISBOA E is 2.46 times less risky than HUTCHISON TELECOMM. It trades about -0.01 of its potential returns per unit of risk. HUTCHISON TELECOMM is currently generating about -0.01 per unit of risk. If you would invest  379.00  in SPORT LISBOA E on October 11, 2024 and sell it today you would lose (68.00) from holding SPORT LISBOA E or give up 17.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

SPORT LISBOA E  vs.  HUTCHISON TELECOMM

SPORT LISBOA E

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPORT LISBOA and HUTCHISON TELECOMM

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

The idea behind SPORT LISBOA E and HUTCHISON TELECOMM 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.