Correlation Between COSCO SHIPPING and Hutchison Port

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

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

Diversification Opportunities for COSCO SHIPPING and Hutchison Port

0.0

Correlation Coefficient

COSCO SHIPPING  Hutchison Port

Pay attention - limited upside

The 3 months correlation between COSCO and Hutchison is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding COSCO SHIPPING Development and Hutchison Port Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hutchison Port Holdings and COSCO SHIPPING 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 COSCO SHIPPING Development are associated (or correlated) with Hutchison Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hutchison Port Holdings has no effect on the direction of COSCO SHIPPING i.e., COSCO SHIPPING and Hutchison Port go up and down completely randomly.

Pair Corralation between COSCO SHIPPING and Hutchison Port

Assuming the 90 days horizon COSCO SHIPPING Development is expected to generate 7.1 times more return on investment than Hutchison Port. However, COSCO SHIPPING is 7.1 times more volatile than Hutchison Port Holdings. It trades about 0.1 of its potential returns per unit of risk. Hutchison Port Holdings is currently generating about 0.01 per unit of risk. If you would invest  13.00  in COSCO SHIPPING Development on September 14, 2024 and sell it today you would lose (2.00) from holding COSCO SHIPPING Development or give up 15.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	59.07%
Values	Daily Returns

COSCO SHIPPING Development  vs.  Hutchison Port Holdings

COSCO SHIPPING Devel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COSCO SHIPPING Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COSCO SHIPPING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hutchison Port Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with COSCO SHIPPING and Hutchison Port

The main advantage of trading using opposite COSCO SHIPPING and Hutchison Port positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSCO SHIPPING position performs unexpectedly, Hutchison Port 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 Port will offset losses from the drop in Hutchison Port's long position.

The idea behind COSCO SHIPPING Development and Hutchison Port 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..