Correlation Between Marubeni and CK Hutchison

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

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

Diversification Opportunities for Marubeni and CK Hutchison

0.3

Correlation Coefficient

Marubeni  CK Hutchison

Weak diversification

The 3 months correlation between Marubeni and CKHUF is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Marubeni and CK Hutchison Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Hutchison Holdings and Marubeni 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 Marubeni are associated (or correlated) with CK Hutchison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Hutchison Holdings has no effect on the direction of Marubeni i.e., Marubeni and CK Hutchison go up and down completely randomly.

Pair Corralation between Marubeni and CK Hutchison

Assuming the 90 days horizon Marubeni is expected to generate 1.33 times more return on investment than CK Hutchison. However, Marubeni is 1.33 times more volatile than CK Hutchison Holdings. It trades about 0.15 of its potential returns per unit of risk. CK Hutchison Holdings is currently generating about -0.03 per unit of risk. If you would invest  1,427  in Marubeni on September 1, 2024 and sell it today you would earn a total of  173.00  from holding Marubeni or generate 12.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Marubeni  vs.  CK Hutchison Holdings

Marubeni

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marubeni are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Marubeni is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CK Hutchison Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Marubeni and CK Hutchison

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

The idea behind Marubeni and CK Hutchison 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.