Correlation Between Altus Power and Hutchison Port

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Can any of the company-specific risk be diversified away by investing in both Altus Power 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 Altus Power and Hutchison Port into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altus Power and Hutchison Port Holdings, you can compare the effects of market volatilities on Altus Power 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 Altus Power with a short position of Hutchison Port. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Power and Hutchison Port.

Diversification Opportunities for Altus Power and Hutchison Port

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Altus and Hutchison is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Altus Power 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 Altus Power 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 Altus Power 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 Altus Power i.e., Altus Power and Hutchison Port go up and down completely randomly.

Pair Corralation between Altus Power and Hutchison Port

Given the investment horizon of 90 days Altus Power is expected to generate 0.24 times more return on investment than Hutchison Port. However, Altus Power is 4.18 times less risky than Hutchison Port. It trades about -0.15 of its potential returns per unit of risk. Hutchison Port Holdings is currently generating about -0.17 per unit of risk. If you would invest  806.00  in Altus Power on September 10, 2022 and sell it today you would lose (148.50)  from holding Altus Power or give up 18.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Altus Power  vs.  Hutchison Port Holdings

 Performance (%) 
       Timeline  
Altus Power 
Altus Performance
0 of 100
Over the last 90 days Altus Power has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in January 2023. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Altus Price Channel

Hutchison Port Holdings 
Hutchison Performance
0 of 100
Over the last 90 days Hutchison Port Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hutchison Price Channel

Altus Power and Hutchison Port Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Altus Power and Hutchison Port

The main advantage of trading using opposite Altus Power and Hutchison Port positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altus Power 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 effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Altus Power as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Altus Power's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Altus Power's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Altus Power.
The idea behind Altus Power 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.
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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