Correlation Between Aldel Financial and HUTCHMED DRC
Can any of the company-specific risk be diversified away by investing in both Aldel Financial 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 Aldel Financial and HUTCHMED DRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aldel Financial II and HUTCHMED DRC, you can compare the effects of market volatilities on Aldel Financial 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 Aldel Financial with a short position of HUTCHMED DRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and HUTCHMED DRC.
Diversification Opportunities for Aldel Financial and HUTCHMED DRC
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aldel and HUTCHMED is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and HUTCHMED DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHMED DRC and Aldel Financial 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 Aldel Financial II 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 Aldel Financial i.e., Aldel Financial and HUTCHMED DRC go up and down completely randomly.
Pair Corralation between Aldel Financial and HUTCHMED DRC
Assuming the 90 days horizon Aldel Financial II is expected to generate 0.04 times more return on investment than HUTCHMED DRC. However, Aldel Financial II is 26.13 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 -0.31 per unit of risk. If you would invest 999.00 in Aldel Financial II on August 24, 2024 and sell it today you would earn a total of 1.00 from holding Aldel Financial II or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aldel Financial II vs. HUTCHMED DRC
Performance |
| Timeline |
| Aldel Financial II |
| HUTCHMED DRC |
Aldel Financial and HUTCHMED DRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aldel Financial and HUTCHMED DRC
The main advantage of trading using opposite Aldel Financial and HUTCHMED DRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial 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.| Aldel Financial vs. Voyager Acquisition Corp | Aldel Financial vs. dMY Squared Technology | Aldel Financial vs. YHN Acquisition I | Aldel Financial vs. YHN Acquisition I |
| HUTCHMED DRC vs. ANI Pharmaceuticals | HUTCHMED DRC vs. Phibro Animal Health | HUTCHMED DRC vs. Prestige Brand Holdings | HUTCHMED DRC vs. Pacira BioSciences, |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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