Correlation Between HUTCHMED DRC and PLBIIJ

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

By analyzing existing cross correlation between HUTCHMED DRC and PLBIIJ 425 05 MAY 25, you can compare the effects of market volatilities on HUTCHMED DRC and PLBIIJ 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 PLBIIJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUTCHMED DRC and PLBIIJ.

Diversification Opportunities for HUTCHMED DRC and PLBIIJ

-0.48

Correlation Coefficient

HUTCHMED DRC  PLBIIJ

Very good diversification

The 3 months correlation between HUTCHMED and PLBIIJ is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and PLBIIJ 425 05 MAY 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLBIIJ 425 05 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 PLBIIJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLBIIJ 425 05 has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and PLBIIJ go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and PLBIIJ

Considering the 90-day investment horizon HUTCHMED DRC is expected to under-perform the PLBIIJ. In addition to that, HUTCHMED DRC is 4.5 times more volatile than PLBIIJ 425 05 MAY 25. It trades about -0.19 of its total potential returns per unit of risk. PLBIIJ 425 05 MAY 25 is currently generating about -0.16 per unit of volatility. If you would invest  9,935  in PLBIIJ 425 05 MAY 25 on October 25, 2024 and sell it today you would lose (210.00) from holding PLBIIJ 425 05 MAY 25 or give up 2.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	31.67%
Values	Daily Returns

HUTCHMED DRC  vs.  PLBIIJ 425 05 MAY 25

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.

PLBIIJ 425 05

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLBIIJ 425 05 MAY 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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 PLBIIJ 425 05 MAY 25 investors.

Pair Trading with HUTCHMED DRC and PLBIIJ

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

The idea behind HUTCHMED DRC and PLBIIJ 425 05 MAY 25 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 CEOs Directory module to screen CEOs from public companies around the world.