Correlation Between HUTCHMED DRC and ESGEN Acquisition

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

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

Diversification Opportunities for HUTCHMED DRC and ESGEN Acquisition

-0.81

Correlation Coefficient

HUTCHMED DRC  ESGEN Acquisition

Pay attention - limited upside

The 3 months correlation between HUTCHMED and ESGEN is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and ESGEN Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESGEN Acquisition Corp 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 ESGEN Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESGEN Acquisition Corp has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and ESGEN Acquisition go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and ESGEN Acquisition

If you would invest  1,661  in HUTCHMED DRC on October 7, 2024 and sell it today you would lose (162.00) from holding HUTCHMED DRC or give up 9.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	0.4%
Values	Daily Returns

HUTCHMED DRC  vs.  ESGEN Acquisition Corp

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.

ESGEN Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESGEN Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, ESGEN Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HUTCHMED DRC and ESGEN Acquisition

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

The idea behind HUTCHMED DRC and ESGEN Acquisition Corp 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.