Correlation Between GigCapital5 and HUTCHMED DRC

Can any of the company-specific risk be diversified away by investing in both GigCapital5 and HUTCHMED DRC 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 GigCapital5 and HUTCHMED DRC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GigCapital5 and HUTCHMED DRC, you can compare the effects of market volatilities on GigCapital5 and HUTCHMED DRC 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 GigCapital5 with a short position of HUTCHMED DRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GigCapital5 and HUTCHMED DRC.

Diversification Opportunities for GigCapital5 and HUTCHMED DRC

0.21

Correlation Coefficient

GigCapital5  HUTCHMED DRC

Modest diversification

The 3 months correlation between GigCapital5 and HUTCHMED is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding GigCapital5 and HUTCHMED DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHMED DRC and GigCapital5 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 GigCapital5 are associated (or correlated) with HUTCHMED DRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUTCHMED DRC has no effect on the direction of GigCapital5 i.e., GigCapital5 and HUTCHMED DRC go up and down completely randomly.

Pair Corralation between GigCapital5 and HUTCHMED DRC

If you would invest  1.15  in GigCapital5 on September 17, 2024 and sell it today you would earn a total of  0.00  from holding GigCapital5 or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.54%
Values	Daily Returns

GigCapital5  vs.  HUTCHMED DRC

GigCapital5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GigCapital5 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, GigCapital5 is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

HUTCHMED DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUTCHMED DRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, HUTCHMED DRC is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GigCapital5 and HUTCHMED DRC

The main advantage of trading using opposite GigCapital5 and HUTCHMED DRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigCapital5 position performs unexpectedly, HUTCHMED DRC 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 HUTCHMED DRC will offset losses from the drop in HUTCHMED DRC's long position.

The idea behind GigCapital5 and HUTCHMED DRC 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.