Correlation Between Valmont Industries and CK Hutchison

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

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

Diversification Opportunities for Valmont Industries and CK Hutchison

-0.36

Correlation Coefficient

Valmont Industries  CK Hutchison

Very good diversification

The 3 months correlation between Valmont and CKHUF is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Valmont Industries and CK Hutchison Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Hutchison Holdings and Valmont Industries 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 Valmont Industries 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 Holdings has no effect on the direction of Valmont Industries i.e., Valmont Industries and CK Hutchison go up and down completely randomly.

Pair Corralation between Valmont Industries and CK Hutchison

Considering the 90-day investment horizon Valmont Industries is expected to under-perform the CK Hutchison. But the stock apears to be less risky and, when comparing its historical volatility, Valmont Industries is 1.2 times less risky than CK Hutchison. The stock trades about -0.01 of its potential returns per unit of risk. The CK Hutchison Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  538.00  in CK Hutchison Holdings on December 28, 2024 and sell it today you would earn a total of  52.00  from holding CK Hutchison Holdings or generate 9.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

Valmont Industries  vs.  CK Hutchison Holdings

Valmont Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valmont Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Valmont Industries is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

CK Hutchison Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CK Hutchison Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CK Hutchison reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valmont Industries and CK Hutchison

The main advantage of trading using opposite Valmont Industries and CK Hutchison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valmont Industries 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 Valmont Industries and CK Hutchison Holdings 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.