Correlation Between HUTCHMED DRC and Immunocore Holdings

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

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

Diversification Opportunities for HUTCHMED DRC and Immunocore Holdings

-0.35

Correlation Coefficient

HUTCHMED DRC  Immunocore Holdings

Very good diversification

The 3 months correlation between HUTCHMED and Immunocore is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and Immunocore Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immunocore 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 Immunocore Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immunocore Holdings has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and Immunocore Holdings go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and Immunocore Holdings

Considering the 90-day investment horizon HUTCHMED DRC is expected to generate 1.33 times more return on investment than Immunocore Holdings. However, HUTCHMED DRC is 1.33 times more volatile than Immunocore Holdings. It trades about 0.04 of its potential returns per unit of risk. Immunocore Holdings is currently generating about -0.05 per unit of risk. If you would invest  1,744  in HUTCHMED DRC on August 31, 2024 and sell it today you would earn a total of  99.00  from holding HUTCHMED DRC or generate 5.68% return on investment over 90 days.

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

HUTCHMED DRC  vs.  Immunocore Holdings

HUTCHMED DRC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HUTCHMED DRC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, HUTCHMED DRC may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Immunocore Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Immunocore Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental 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 Immunocore Holdings

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

The idea behind HUTCHMED DRC and Immunocore 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.