Correlation Between Ihuman and HUTCHMED DRC

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

By analyzing existing cross correlation between Ihuman Inc and HUTCHMED DRC, you can compare the effects of market volatilities on Ihuman and HUTCHMED DRC 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 Ihuman with a short position of HUTCHMED DRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ihuman and HUTCHMED DRC.

Diversification Opportunities for Ihuman and HUTCHMED DRC

0.5

Correlation Coefficient

Ihuman  HUTCHMED DRC

Very weak diversification

The 3 months correlation between Ihuman and HUTCHMED is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ihuman Inc and HUTCHMED DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHMED DRC and Ihuman 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 Ihuman Inc are associated (or correlated) with HUTCHMED DRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUTCHMED DRC has no effect on the direction of Ihuman i.e., Ihuman and HUTCHMED DRC go up and down completely randomly.

Pair Corralation between Ihuman and HUTCHMED DRC

Allowing for the 90-day total investment horizon Ihuman Inc is expected to generate 0.87 times more return on investment than HUTCHMED DRC. However, Ihuman Inc is 1.15 times less risky than HUTCHMED DRC. It trades about -0.04 of its potential returns per unit of risk. HUTCHMED DRC is currently generating about -0.2 per unit of risk. If you would invest  182.00  in Ihuman Inc on October 23, 2024 and sell it today you would lose (15.00) from holding Ihuman Inc or give up 8.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ihuman Inc  vs.  HUTCHMED DRC

Ihuman Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ihuman Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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.

Pair Trading with Ihuman and HUTCHMED DRC

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

The idea behind Ihuman Inc and HUTCHMED DRC 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.