Correlation Between Macquarie Group and Hutchison Telecommunicatio

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

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

Diversification Opportunities for Macquarie Group and Hutchison Telecommunicatio

-0.19

Correlation Coefficient

Macquarie Group  Hutchison Telecommunicatio

Good diversification

The 3 months correlation between Macquarie and Hutchison is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Hutchison Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hutchison Telecommunicatio and Macquarie Group 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 Macquarie Group Ltd are associated (or correlated) with Hutchison Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hutchison Telecommunicatio has no effect on the direction of Macquarie Group i.e., Macquarie Group and Hutchison Telecommunicatio go up and down completely randomly.

Pair Corralation between Macquarie Group and Hutchison Telecommunicatio

Assuming the 90 days trading horizon Macquarie Group Ltd is expected to generate 0.06 times more return on investment than Hutchison Telecommunicatio. However, Macquarie Group Ltd is 17.44 times less risky than Hutchison Telecommunicatio. It trades about 0.05 of its potential returns per unit of risk. Hutchison Telecommunications is currently generating about -0.03 per unit of risk. If you would invest  10,265  in Macquarie Group Ltd on December 25, 2024 and sell it today you would earn a total of  85.00  from holding Macquarie Group Ltd or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Macquarie Group Ltd  vs.  Hutchison Telecommunications

Macquarie Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Group Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Macquarie Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Hutchison Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hutchison Telecommunications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Macquarie Group and Hutchison Telecommunicatio

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

The idea behind Macquarie Group Ltd and Hutchison Telecommunications 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.