Correlation Between HUTCHMED DRC and Accolade

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

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

Diversification Opportunities for HUTCHMED DRC and Accolade

0.03

Correlation Coefficient

HUTCHMED DRC  Accolade

Significant diversification

The 3 months correlation between HUTCHMED and Accolade is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and Accolade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accolade and HUTCHMED DRC 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 HUTCHMED DRC are associated (or correlated) with Accolade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accolade has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and Accolade go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and Accolade

Considering the 90-day investment horizon HUTCHMED DRC is expected to generate 30.42 times less return on investment than Accolade. But when comparing it to its historical volatility, HUTCHMED DRC is 3.83 times less risky than Accolade. It trades about 0.02 of its potential returns per unit of risk. Accolade is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  354.00  in Accolade on December 27, 2024 and sell it today you would earn a total of  345.00  from holding Accolade or generate 97.46% return on investment over 90 days.

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

HUTCHMED DRC  vs.  Accolade

HUTCHMED DRC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUTCHMED DRC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, HUTCHMED DRC is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Accolade

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Accolade are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Accolade exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUTCHMED DRC and Accolade

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

The idea behind HUTCHMED DRC and Accolade 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.