Correlation Between Shenandoah Telecommunicatio and HUTCHISON TELECOMM

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

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

Diversification Opportunities for Shenandoah Telecommunicatio and HUTCHISON TELECOMM

-0.33

Correlation Coefficient

Shenandoah Telecommunicatio  HUTCHISON TELECOMM

Very good diversification

The 3 months correlation between Shenandoah and HUTCHISON is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and HUTCHISON TELECOMM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHISON TELECOMM and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications 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 Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and HUTCHISON TELECOMM go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and HUTCHISON TELECOMM

Assuming the 90 days horizon Shenandoah Telecommunications is expected to generate 0.53 times more return on investment than HUTCHISON TELECOMM. However, Shenandoah Telecommunications is 1.89 times less risky than HUTCHISON TELECOMM. It trades about -0.01 of its potential returns per unit of risk. HUTCHISON TELECOMM is currently generating about -0.01 per unit of risk. If you would invest  1,670  in Shenandoah Telecommunications on October 11, 2024 and sell it today you would lose (480.00) from holding Shenandoah Telecommunications or give up 28.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Shenandoah Telecommunications  vs.  HUTCHISON TELECOMM

Shenandoah Telecommunicatio

Risk-Adjusted Performance

2 of 100

Weak

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

HUTCHISON TELECOMM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUTCHISON TELECOMM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, HUTCHISON TELECOMM is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Shenandoah Telecommunicatio and HUTCHISON TELECOMM

The main advantage of trading using opposite Shenandoah Telecommunicatio and HUTCHISON TELECOMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenandoah Telecommunicatio 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 Shenandoah Telecommunications 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.