Correlation Between Safe Bulkers and Hutchison Port

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

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

Diversification Opportunities for Safe Bulkers and Hutchison Port

0.16

Correlation Coefficient

Safe Bulkers  Hutchison Port

Average diversification

The 3 months correlation between Safe and Hutchison is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers 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 Safe Bulkers 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 Safe Bulkers 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 Safe Bulkers i.e., Safe Bulkers and Hutchison Port go up and down completely randomly.

Pair Corralation between Safe Bulkers and Hutchison Port

Assuming the 90 days horizon Safe Bulkers is expected to generate 1.58 times less return on investment than Hutchison Port. But when comparing it to its historical volatility, Safe Bulkers is 7.29 times less risky than Hutchison Port. It trades about 0.09 of its potential returns per unit of risk. Hutchison Port Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  294.00  in Hutchison Port Holdings on September 14, 2024 and sell it today you would earn a total of  1.00  from holding Hutchison Port Holdings or generate 0.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.82%
Values	Daily Returns

Safe Bulkers  vs.  Hutchison Port Holdings

Safe Bulkers

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Safe Bulkers is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 fragile technical indicators, Hutchison Port may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Safe Bulkers and Hutchison Port

The main advantage of trading using opposite Safe Bulkers and Hutchison Port positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe Bulkers 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 Safe Bulkers 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.