Correlation Between HUTCHMED DRC and United Airlines

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

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

Diversification Opportunities for HUTCHMED DRC and United Airlines

-0.61

Correlation Coefficient

HUTCHMED DRC  United Airlines

Excellent diversification

The 3 months correlation between HUTCHMED and United is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and United Airlines go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and United Airlines

Considering the 90-day investment horizon HUTCHMED DRC is expected to generate 1.12 times more return on investment than United Airlines. However, HUTCHMED DRC is 1.12 times more volatile than United Airlines Holdings. It trades about 0.08 of its potential returns per unit of risk. United Airlines Holdings is currently generating about -0.14 per unit of risk. If you would invest  1,431  in HUTCHMED DRC on December 20, 2024 and sell it today you would earn a total of  182.00  from holding HUTCHMED DRC or generate 12.72% 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.  United Airlines Holdings

HUTCHMED DRC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HUTCHMED DRC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, HUTCHMED DRC displayed solid returns over the last few months and may actually be approaching a breakup point.

United Airlines Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Airlines Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with HUTCHMED DRC and United Airlines

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

The idea behind HUTCHMED DRC and United Airlines 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.