Correlation Between Mitsubishi and CK Hutchison

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

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

Diversification Opportunities for Mitsubishi and CK Hutchison

-0.34

Correlation Coefficient

Mitsubishi  CK Hutchison

Very good diversification

The 3 months correlation between Mitsubishi and 2CK is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi 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 Mitsubishi 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 Mitsubishi 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 Mitsubishi i.e., Mitsubishi and CK Hutchison go up and down completely randomly.

Pair Corralation between Mitsubishi and CK Hutchison

Assuming the 90 days horizon Mitsubishi is expected to generate 4.25 times less return on investment than CK Hutchison. In addition to that, Mitsubishi is 1.15 times more volatile than CK Hutchison Holdings. It trades about 0.04 of its total potential returns per unit of risk. CK Hutchison Holdings is currently generating about 0.17 per unit of volatility. If you would invest  487.00  in CK Hutchison Holdings on May 7, 2025 and sell it today you would earn a total of  73.00  from holding CK Hutchison Holdings or generate 14.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mitsubishi  vs.  CK Hutchison Holdings

Mitsubishi

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Mitsubishi is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CK Hutchison Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CK Hutchison Holdings are ranked lower than 13 (%) 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 Mitsubishi and CK Hutchison

The main advantage of trading using opposite Mitsubishi and CK Hutchison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi 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 Mitsubishi 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.