Correlation Between HUTCHMED DRC and Femasys

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

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

Diversification Opportunities for HUTCHMED DRC and Femasys

0.41

Correlation Coefficient

HUTCHMED DRC  Femasys

Very weak diversification

The 3 months correlation between HUTCHMED and Femasys is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and Femasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Femasys 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 Femasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Femasys has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and Femasys go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and Femasys

Considering the 90-day investment horizon HUTCHMED DRC is expected to generate 13.24 times less return on investment than Femasys. But when comparing it to its historical volatility, HUTCHMED DRC is 4.54 times less risky than Femasys. It trades about 0.01 of its potential returns per unit of risk. Femasys is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  119.00  in Femasys on October 11, 2024 and sell it today you would lose (10.00) from holding Femasys or give up 8.4% of portfolio value over 90 days.

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

HUTCHMED DRC  vs.  Femasys

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.

Femasys

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with HUTCHMED DRC and Femasys

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

The idea behind HUTCHMED DRC and Femasys 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.