Correlation Between HUTCHMED DRC and Foxx Development

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

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

Diversification Opportunities for HUTCHMED DRC and Foxx Development

0.39

Correlation Coefficient

HUTCHMED DRC  Foxx Development

Weak diversification

The 3 months correlation between HUTCHMED and Foxx is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and Foxx Development Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxx Development Holdings 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 Foxx Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxx Development Holdings has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and Foxx Development go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and Foxx Development

Considering the 90-day investment horizon HUTCHMED DRC is expected to generate 2.92 times less return on investment than Foxx Development. But when comparing it to its historical volatility, HUTCHMED DRC is 5.25 times less risky than Foxx Development. It trades about 0.08 of its potential returns per unit of risk. Foxx Development Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  582.00  in Foxx Development Holdings on December 20, 2024 and sell it today you would lose (83.00) from holding Foxx Development Holdings or give up 14.26% of portfolio value over 90 days.

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

HUTCHMED DRC  vs.  Foxx Development Holdings

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.

Foxx Development Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Foxx Development Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Foxx Development showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUTCHMED DRC and Foxx Development

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

The idea behind HUTCHMED DRC and Foxx Development Holdings 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.

Check out your portfolio center.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.