Correlation Between HUTCHMED DRC and Allient

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

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

Diversification Opportunities for HUTCHMED DRC and Allient

-0.69

Correlation Coefficient

HUTCHMED DRC  Allient

Excellent diversification

The 3 months correlation between HUTCHMED and Allient is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient 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 Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and Allient go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and Allient

Considering the 90-day investment horizon HUTCHMED DRC is expected to under-perform the Allient. In addition to that, HUTCHMED DRC is 1.22 times more volatile than Allient. It trades about 0.0 of its total potential returns per unit of risk. Allient is currently generating about 0.18 per unit of volatility. If you would invest  2,041  in Allient on September 14, 2024 and sell it today you would earn a total of  652.00  from holding Allient or generate 31.95% return on investment over 90 days.

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

HUTCHMED DRC  vs.  Allient

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.

Allient

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUTCHMED DRC and Allient

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

The idea behind HUTCHMED DRC and Allient 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.