Correlation Between HUTCHMED DRC and YY Group

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

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

Diversification Opportunities for HUTCHMED DRC and YY Group

-0.82

Correlation Coefficient

HUTCHMED DRC  YY Group

Pay attention - limited upside

The 3 months correlation between HUTCHMED and YYGH is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and YY Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YY Group Holding 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 YY Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YY Group Holding has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and YY Group go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and YY Group

Considering the 90-day investment horizon HUTCHMED DRC is expected to generate 0.5 times more return on investment than YY Group. However, HUTCHMED DRC is 2.0 times less risky than YY Group. It trades about 0.01 of its potential returns per unit of risk. YY Group Holding is currently generating about -0.01 per unit of risk. If you would invest  1,598  in HUTCHMED DRC on October 9, 2024 and sell it today you would lose (81.00) from holding HUTCHMED DRC or give up 5.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	72.87%
Values	Daily Returns

HUTCHMED DRC  vs.  YY Group Holding

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.

YY Group Holding

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YY Group Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, YY Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUTCHMED DRC and YY Group

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

The idea behind HUTCHMED DRC and YY Group Holding 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .