Correlation Between Direxion Daily and CK Hutchison

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

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

Diversification Opportunities for Direxion Daily and CK Hutchison

-0.31

Correlation Coefficient

Direxion Daily  CK Hutchison

Very good diversification

The 3 months correlation between Direxion and CKHUF is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid 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 Direxion Daily 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 Direxion Daily Mid 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 Direxion Daily i.e., Direxion Daily and CK Hutchison go up and down completely randomly.

Pair Corralation between Direxion Daily and CK Hutchison

Given the investment horizon of 90 days Direxion Daily is expected to generate 2.47 times less return on investment than CK Hutchison. But when comparing it to its historical volatility, Direxion Daily Mid is 1.45 times less risky than CK Hutchison. It trades about 0.04 of its potential returns per unit of risk. CK Hutchison Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  212.00  in CK Hutchison Holdings on December 2, 2024 and sell it today you would earn a total of  298.00  from holding CK Hutchison Holdings or generate 140.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.91%
Values	Daily Returns

Direxion Daily Mid  vs.  CK Hutchison Holdings

Direxion Daily Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily Mid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

CK Hutchison Holdings

Risk-Adjusted Performance

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 Direxion Daily and CK Hutchison

The main advantage of trading using opposite Direxion Daily and CK Hutchison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily 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 Direxion Daily Mid 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.