Correlation Between Northern Trust and CK HUTCHISON

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

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

Diversification Opportunities for Northern Trust and CK HUTCHISON

-0.43

Correlation Coefficient

Northern Trust  CK HUTCHISON

Very good diversification

The 3 months correlation between Northern and 2CKA is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Northern Trust and CK HUTCHISON HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK HUTCHISON HLDGS and Northern Trust 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 Northern Trust 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 HLDGS has no effect on the direction of Northern Trust i.e., Northern Trust and CK HUTCHISON go up and down completely randomly.

Pair Corralation between Northern Trust and CK HUTCHISON

Assuming the 90 days horizon Northern Trust is expected to generate 0.8 times more return on investment than CK HUTCHISON. However, Northern Trust is 1.24 times less risky than CK HUTCHISON. It trades about 0.03 of its potential returns per unit of risk. CK HUTCHISON HLDGS is currently generating about 0.01 per unit of risk. If you would invest  7,645  in Northern Trust on September 23, 2024 and sell it today you would earn a total of  2,005  from holding Northern Trust or generate 26.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Northern Trust  vs.  CK HUTCHISON HLDGS

Northern Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northern Trust reported solid returns over the last few months and may actually be approaching a breakup point.

CK HUTCHISON HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Northern Trust and CK HUTCHISON

The main advantage of trading using opposite Northern Trust and CK HUTCHISON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Trust 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 Northern Trust and CK HUTCHISON HLDGS 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..