Correlation Between HUTCHMED DRC and 694308HH3

Can any of the company-specific risk be diversified away by investing in both HUTCHMED DRC and 694308HH3 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 694308HH3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HUTCHMED DRC and US694308HH37, you can compare the effects of market volatilities on HUTCHMED DRC and 694308HH3 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 694308HH3. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUTCHMED DRC and 694308HH3.

Diversification Opportunities for HUTCHMED DRC and 694308HH3

0.67

Correlation Coefficient

HUTCHMED DRC  694308HH3

Poor diversification

The 3 months correlation between HUTCHMED and 694308HH3 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and US694308HH37 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US694308HH37 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 694308HH3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US694308HH37 has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and 694308HH3 go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and 694308HH3

Considering the 90-day investment horizon HUTCHMED DRC is expected to under-perform the 694308HH3. In addition to that, HUTCHMED DRC is 3.47 times more volatile than US694308HH37. It trades about -0.2 of its total potential returns per unit of risk. US694308HH37 is currently generating about -0.15 per unit of volatility. If you would invest  8,751  in US694308HH37 on October 23, 2024 and sell it today you would lose (451.00) from holding US694308HH37 or give up 5.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	63.33%
Values	Daily Returns

HUTCHMED DRC  vs.  US694308HH37

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.

US694308HH37

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US694308HH37 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for US694308HH37 investors.

Pair Trading with HUTCHMED DRC and 694308HH3

The main advantage of trading using opposite HUTCHMED DRC and 694308HH3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUTCHMED DRC position performs unexpectedly, 694308HH3 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 694308HH3 will offset losses from the drop in 694308HH3's long position.

The idea behind HUTCHMED DRC and US694308HH37 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 Valuation module to check real value of public entities based on technical and fundamental data.