Correlation Between HUTCHMED DRC and StandardAero,

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

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

Diversification Opportunities for HUTCHMED DRC and StandardAero,

0.9

Correlation Coefficient

HUTCHMED DRC  StandardAero,

Almost no diversification

The 3 months correlation between HUTCHMED and StandardAero, is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and StandardAero, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StandardAero, 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 StandardAero,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StandardAero, has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and StandardAero, go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and StandardAero,

Considering the 90-day investment horizon HUTCHMED DRC is expected to under-perform the StandardAero,. In addition to that, HUTCHMED DRC is 1.57 times more volatile than StandardAero,. It trades about -0.15 of its total potential returns per unit of risk. StandardAero, is currently generating about -0.18 per unit of volatility. If you would invest  2,888  in StandardAero, on October 22, 2024 and sell it today you would lose (424.00) from holding StandardAero, or give up 14.68% of portfolio value over 90 days.

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

HUTCHMED DRC  vs.  StandardAero,

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.

StandardAero,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StandardAero, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic 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.

Pair Trading with HUTCHMED DRC and StandardAero,

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

The idea behind HUTCHMED DRC and StandardAero, 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.