Correlation Between PNC Financial and HUTCHISON TELECOMM

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

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

Diversification Opportunities for PNC Financial and HUTCHISON TELECOMM

-0.34

Correlation Coefficient

PNC Financial  HUTCHISON TELECOMM

Very good diversification

The 3 months correlation between PNC and HUTCHISON is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding PNC Financial Services and HUTCHISON TELECOMM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHISON TELECOMM and PNC Financial 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 PNC Financial Services 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 PNC Financial i.e., PNC Financial and HUTCHISON TELECOMM go up and down completely randomly.

Pair Corralation between PNC Financial and HUTCHISON TELECOMM

Assuming the 90 days trading horizon PNC Financial Services is expected to generate 0.33 times more return on investment than HUTCHISON TELECOMM. However, PNC Financial Services is 3.06 times less risky than HUTCHISON TELECOMM. It trades about 0.05 of its potential returns per unit of risk. HUTCHISON TELECOMM is currently generating about 0.0 per unit of risk. If you would invest  13,784  in PNC Financial Services on October 23, 2024 and sell it today you would earn a total of  5,316  from holding PNC Financial Services or generate 38.57% return on investment over 90 days.

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

PNC Financial Services  vs.  HUTCHISON TELECOMM

PNC Financial Services

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PNC Financial Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, PNC Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

HUTCHISON TELECOMM

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUTCHISON TELECOMM are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, HUTCHISON TELECOMM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PNC Financial and HUTCHISON TELECOMM

The main advantage of trading using opposite PNC Financial and HUTCHISON TELECOMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PNC Financial 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 PNC Financial Services 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.