Correlation Between HUTCHMED DRC and Ameriprise Financial

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

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

Diversification Opportunities for HUTCHMED DRC and Ameriprise Financial

-0.5

Correlation Coefficient

HUTCHMED DRC  Ameriprise Financial

Very good diversification

The 3 months correlation between HUTCHMED and Ameriprise is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial 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 Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and Ameriprise Financial go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and Ameriprise Financial

Considering the 90-day investment horizon HUTCHMED DRC is expected to generate 1.99 times more return on investment than Ameriprise Financial. However, HUTCHMED DRC is 1.99 times more volatile than Ameriprise Financial. It trades about 0.08 of its potential returns per unit of risk. Ameriprise Financial is currently generating about -0.07 per unit of risk. If you would invest  1,425  in HUTCHMED DRC on December 21, 2024 and sell it today you would earn a total of  188.00  from holding HUTCHMED DRC or generate 13.19% return on investment over 90 days.

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

HUTCHMED DRC  vs.  Ameriprise Financial

HUTCHMED DRC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HUTCHMED DRC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, HUTCHMED DRC displayed solid returns over the last few months and may actually be approaching a breakup point.

Ameriprise Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ameriprise Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with HUTCHMED DRC and Ameriprise Financial

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

The idea behind HUTCHMED DRC and Ameriprise Financial 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.