Correlation Between Analog Devices and HUTCHMED DRC
Can any of the company-specific risk be diversified away by investing in both Analog Devices 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 Analog Devices and HUTCHMED DRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and HUTCHMED DRC, you can compare the effects of market volatilities on Analog Devices 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 Analog Devices with a short position of HUTCHMED DRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and HUTCHMED DRC.
Diversification Opportunities for Analog Devices and HUTCHMED DRC
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Analog and HUTCHMED is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and HUTCHMED DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHMED DRC and Analog Devices 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 Analog Devices 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 Analog Devices i.e., Analog Devices and HUTCHMED DRC go up and down completely randomly.
Pair Corralation between Analog Devices and HUTCHMED DRC
Considering the 90-day investment horizon Analog Devices is expected to generate 0.63 times more return on investment than HUTCHMED DRC. However, Analog Devices is 1.6 times less risky than HUTCHMED DRC. It trades about -0.06 of its potential returns per unit of risk. HUTCHMED DRC is currently generating about -0.11 per unit of risk. If you would invest 22,419 in Analog Devices on September 3, 2024 and sell it today you would lose (614.00) from holding Analog Devices or give up 2.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. HUTCHMED DRC
Performance |
| Timeline |
| Analog Devices |
| HUTCHMED DRC |
Analog Devices and HUTCHMED DRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and HUTCHMED DRC
The main advantage of trading using opposite Analog Devices and HUTCHMED DRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices 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.| Analog Devices vs. Silicon Motion Technology | Analog Devices vs. ASE Industrial Holding | Analog Devices vs. SemiLEDS | Analog Devices vs. Advanced Micro Devices |
| HUTCHMED DRC vs. Connect Biopharma Holdings | HUTCHMED DRC vs. Acumen Pharmaceuticals | HUTCHMED DRC vs. Nuvation Bio | HUTCHMED DRC vs. Eledon Pharmaceuticals |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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