Correlation Between Ayala Corp and CK Hutchison

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

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

Diversification Opportunities for Ayala Corp and CK Hutchison

-0.18

Correlation Coefficient

Ayala Corp  CK Hutchison

Good diversification

The 3 months correlation between Ayala and CKHUF is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ayala Corp ADR 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 Ayala Corp 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 Ayala Corp ADR 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 Ayala Corp i.e., Ayala Corp and CK Hutchison go up and down completely randomly.

Pair Corralation between Ayala Corp and CK Hutchison

Assuming the 90 days horizon Ayala Corp ADR is expected to generate 2.9 times more return on investment than CK Hutchison. However, Ayala Corp is 2.9 times more volatile than CK Hutchison Holdings. It trades about 0.07 of its potential returns per unit of risk. CK Hutchison Holdings is currently generating about 0.05 per unit of risk. If you would invest  1,050  in Ayala Corp ADR on September 12, 2024 and sell it today you would earn a total of  241.00  from holding Ayala Corp ADR or generate 22.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Ayala Corp ADR  vs.  CK Hutchison Holdings

Ayala Corp ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ayala Corp ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Ayala Corp showed solid returns over the last few months and may actually be approaching a breakup point.

CK Hutchison Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CK Hutchison Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CK Hutchison may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ayala Corp and CK Hutchison

The main advantage of trading using opposite Ayala Corp and CK Hutchison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ayala Corp 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 Ayala Corp ADR 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 Transaction History module to view history of all your transactions and understand their impact on performance.