Correlation Between CK Hutchison and Marubeni

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

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

Diversification Opportunities for CK Hutchison and Marubeni

0.32

Correlation Coefficient

CK Hutchison  Marubeni

Weak diversification

The 3 months correlation between CKHUF and Marubeni is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CK Hutchison Holdings and Marubeni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni and CK Hutchison 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 CK Hutchison Holdings are associated (or correlated) with Marubeni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni has no effect on the direction of CK Hutchison i.e., CK Hutchison and Marubeni go up and down completely randomly.

Pair Corralation between CK Hutchison and Marubeni

Assuming the 90 days horizon CK Hutchison Holdings is expected to generate 12.91 times more return on investment than Marubeni. However, CK Hutchison is 12.91 times more volatile than Marubeni. It trades about 0.16 of its potential returns per unit of risk. Marubeni is currently generating about 0.04 per unit of risk. If you would invest  205.00  in CK Hutchison Holdings on September 4, 2024 and sell it today you would earn a total of  320.00  from holding CK Hutchison Holdings or generate 156.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	89.09%
Values	Daily Returns

CK Hutchison Holdings  vs.  Marubeni

CK Hutchison Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CK Hutchison Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CK Hutchison is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Marubeni

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with CK Hutchison and Marubeni

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

The idea behind CK Hutchison Holdings and Marubeni 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.