Correlation Between HUTCHMED China and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both HUTCHMED China and CleanTech Lithium 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 China and CleanTech Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HUTCHMED China and CleanTech Lithium plc, you can compare the effects of market volatilities on HUTCHMED China and CleanTech Lithium 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 China with a short position of CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUTCHMED China and CleanTech Lithium.
Diversification Opportunities for HUTCHMED China and CleanTech Lithium
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HUTCHMED and CleanTech is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED China and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium plc and HUTCHMED China 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 China are associated (or correlated) with CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of HUTCHMED China i.e., HUTCHMED China and CleanTech Lithium go up and down completely randomly.
Pair Corralation between HUTCHMED China and CleanTech Lithium
Assuming the 90 days trading horizon HUTCHMED China is expected to generate 0.67 times more return on investment than CleanTech Lithium. However, HUTCHMED China is 1.5 times less risky than CleanTech Lithium. It trades about 0.04 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about -0.07 per unit of risk. If you would invest 20,800 in HUTCHMED China on September 12, 2024 and sell it today you would earn a total of 6,200 from holding HUTCHMED China or generate 29.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HUTCHMED China vs. CleanTech Lithium plc
Performance |
| Timeline |
| HUTCHMED China |
| CleanTech Lithium plc |
HUTCHMED China and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HUTCHMED China and CleanTech Lithium
The main advantage of trading using opposite HUTCHMED China and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUTCHMED China position performs unexpectedly, CleanTech Lithium 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 CleanTech Lithium will offset losses from the drop in CleanTech Lithium's long position.| HUTCHMED China vs. CleanTech Lithium plc | HUTCHMED China vs. Neometals | HUTCHMED China vs. American Homes 4 | HUTCHMED China vs. Central Asia Metals |
| CleanTech Lithium vs. Givaudan SA | CleanTech Lithium vs. Antofagasta PLC | CleanTech Lithium vs. Ferrexpo PLC | CleanTech Lithium vs. Atalaya Mining |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |