Correlation Between Superior Resources and Hutchison Telecommunicatio

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

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

Diversification Opportunities for Superior Resources and Hutchison Telecommunicatio

-0.14

Correlation Coefficient

Superior Resources  Hutchison Telecommunicatio

Good diversification

The 3 months correlation between Superior and Hutchison is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Superior Resources and Hutchison Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hutchison Telecommunicatio and Superior Resources 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 Superior Resources 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 Superior Resources i.e., Superior Resources and Hutchison Telecommunicatio go up and down completely randomly.

Pair Corralation between Superior Resources and Hutchison Telecommunicatio

Assuming the 90 days trading horizon Superior Resources is expected to under-perform the Hutchison Telecommunicatio. In addition to that, Superior Resources is 1.48 times more volatile than Hutchison Telecommunications. It trades about -0.02 of its total potential returns per unit of risk. Hutchison Telecommunications is currently generating about -0.01 per unit of volatility. If you would invest  6.00  in Hutchison Telecommunications on December 2, 2024 and sell it today you would lose (3.70) from holding Hutchison Telecommunications or give up 61.67% of portfolio value over 90 days.

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

Superior Resources  vs.  Hutchison Telecommunications

Superior Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Superior Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 comparatively stable basic indicators, Hutchison Telecommunicatio is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Superior Resources and Hutchison Telecommunicatio

The main advantage of trading using opposite Superior Resources and Hutchison Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Resources 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 Superior Resources 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.