Correlation Between HUTCHMED DRC and Champions Oncology

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

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

Diversification Opportunities for HUTCHMED DRC and Champions Oncology

-0.76

Correlation Coefficient

HUTCHMED DRC  Champions Oncology

Pay attention - limited upside

The 3 months correlation between HUTCHMED and Champions is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and Champions Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champions Oncology 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 Champions Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champions Oncology has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and Champions Oncology go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and Champions Oncology

Considering the 90-day investment horizon HUTCHMED DRC is expected to generate 3.62 times less return on investment than Champions Oncology. In addition to that, HUTCHMED DRC is 1.09 times more volatile than Champions Oncology. It trades about 0.01 of its total potential returns per unit of risk. Champions Oncology is currently generating about 0.06 per unit of volatility. If you would invest  411.00  in Champions Oncology on October 5, 2024 and sell it today you would earn a total of  409.00  from holding Champions Oncology or generate 99.51% 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.  Champions Oncology

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 weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Champions Oncology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Champions Oncology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental drivers, Champions Oncology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUTCHMED DRC and Champions Oncology

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

The idea behind HUTCHMED DRC and Champions Oncology 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.