Correlation Between HUTCHMED DRC and Tianjin Capital

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

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

Diversification Opportunities for HUTCHMED DRC and Tianjin Capital

-0.69

Correlation Coefficient

HUTCHMED DRC  Tianjin Capital

Excellent diversification

The 3 months correlation between HUTCHMED and Tianjin is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi 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 Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and Tianjin Capital go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and Tianjin Capital

If you would invest  38.00  in Tianjin Capital Environmental on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Tianjin Capital Environmental or generate 0.0% 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.  Tianjin Capital Environmental

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.

Tianjin Capital Envi

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Tianjin Capital Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Tianjin Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HUTCHMED DRC and Tianjin Capital

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

The idea behind HUTCHMED DRC and Tianjin Capital Environmental 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.