Correlation Between HUTCHMED China and Various Eateries
Can any of the company-specific risk be diversified away by investing in both HUTCHMED China and Various Eateries 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 Various Eateries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HUTCHMED China and Various Eateries PLC, you can compare the effects of market volatilities on HUTCHMED China and Various Eateries 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 Various Eateries. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUTCHMED China and Various Eateries.
Diversification Opportunities for HUTCHMED China and Various Eateries
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HUTCHMED and Various is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED China and Various Eateries PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Various Eateries 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 Various Eateries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Various Eateries PLC has no effect on the direction of HUTCHMED China i.e., HUTCHMED China and Various Eateries go up and down completely randomly.
Pair Corralation between HUTCHMED China and Various Eateries
Assuming the 90 days trading horizon HUTCHMED China is expected to generate 3.67 times more return on investment than Various Eateries. However, HUTCHMED China is 3.67 times more volatile than Various Eateries PLC. It trades about 0.01 of its potential returns per unit of risk. Various Eateries PLC is currently generating about -0.42 per unit of risk. If you would invest 22,900 in HUTCHMED China on October 24, 2024 and sell it today you would lose (200.00) from holding HUTCHMED China or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HUTCHMED China vs. Various Eateries PLC
Performance |
| Timeline |
| HUTCHMED China |
| Various Eateries PLC |
HUTCHMED China and Various Eateries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HUTCHMED China and Various Eateries
The main advantage of trading using opposite HUTCHMED China and Various Eateries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUTCHMED China position performs unexpectedly, Various Eateries 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 Various Eateries will offset losses from the drop in Various Eateries' long position.| HUTCHMED China vs. GreenX Metals | HUTCHMED China vs. Monks Investment Trust | HUTCHMED China vs. Beeks Trading | HUTCHMED China vs. AMG Advanced Metallurgical |
| Various Eateries vs. Take Two Interactive Software | Various Eateries vs. Sydbank | Various Eateries vs. Samsung Electronics Co | Various Eateries vs. Alfa Financial Software |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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