Correlation Between HUTCHMED DRC and Nutriband

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

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

Diversification Opportunities for HUTCHMED DRC and Nutriband

-0.08

Correlation Coefficient

HUTCHMED DRC  Nutriband

Good diversification

The 3 months correlation between HUTCHMED and Nutriband is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and Nutriband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutriband 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 Nutriband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutriband has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and Nutriband go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and Nutriband

Considering the 90-day investment horizon HUTCHMED DRC is expected to generate 6.52 times less return on investment than Nutriband. But when comparing it to its historical volatility, HUTCHMED DRC is 2.64 times less risky than Nutriband. It trades about 0.04 of its potential returns per unit of risk. Nutriband is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  418.00  in Nutriband on December 30, 2024 and sell it today you would earn a total of  208.00  from holding Nutriband or generate 49.76% 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.  Nutriband

HUTCHMED DRC

Risk-Adjusted Performance

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 weak fundamental indicators, HUTCHMED DRC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nutriband

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nutriband are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nutriband sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUTCHMED DRC and Nutriband

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

The idea behind HUTCHMED DRC and Nutriband 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.