Correlation Between YY Group and HUTCHMED DRC

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

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

Diversification Opportunities for YY Group and HUTCHMED DRC

-0.64

Correlation Coefficient

YY Group  HUTCHMED DRC

Excellent diversification

The 3 months correlation between YYGH and HUTCHMED is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding YY Group Holding and HUTCHMED DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHMED DRC and YY Group 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 YY Group Holding 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 YY Group i.e., YY Group and HUTCHMED DRC go up and down completely randomly.

Pair Corralation between YY Group and HUTCHMED DRC

Given the investment horizon of 90 days YY Group is expected to generate 11.23 times less return on investment than HUTCHMED DRC. In addition to that, YY Group is 1.98 times more volatile than HUTCHMED DRC. It trades about 0.0 of its total potential returns per unit of risk. HUTCHMED DRC is currently generating about 0.03 per unit of volatility. If you would invest  1,293  in HUTCHMED DRC on October 24, 2024 and sell it today you would earn a total of  126.00  from holding HUTCHMED DRC or generate 9.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	76.52%
Values	Daily Returns

YY Group Holding  vs.  HUTCHMED DRC

YY Group Holding

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YY Group Holding are ranked lower than 14 (%) 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.

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 YY Group and HUTCHMED DRC

The main advantage of trading using opposite YY Group and HUTCHMED DRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YY Group 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 YY Group Holding 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.