Correlation Between HUTCHMED DRC and NeoGenomics

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

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

Diversification Opportunities for HUTCHMED DRC and NeoGenomics

-0.79

Correlation Coefficient

HUTCHMED DRC  NeoGenomics

Pay attention - limited upside

The 3 months correlation between HUTCHMED and NeoGenomics is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and NeoGenomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeoGenomics 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 NeoGenomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeoGenomics has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and NeoGenomics go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and NeoGenomics

Considering the 90-day investment horizon HUTCHMED DRC is expected to generate 3.31 times less return on investment than NeoGenomics. In addition to that, HUTCHMED DRC is 1.28 times more volatile than NeoGenomics. It trades about 0.02 of its total potential returns per unit of risk. NeoGenomics is currently generating about 0.09 per unit of volatility. If you would invest  1,620  in NeoGenomics on September 12, 2024 and sell it today you would earn a total of  223.00  from holding NeoGenomics or generate 13.77% 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.  NeoGenomics

HUTCHMED DRC

Risk-Adjusted Performance

1 of 100

Weak

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

NeoGenomics

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NeoGenomics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, NeoGenomics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUTCHMED DRC and NeoGenomics

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

The idea behind HUTCHMED DRC and NeoGenomics 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.