Correlation Between HUTCHMED DRC and Stepan
Can any of the company-specific risk be diversified away by investing in both HUTCHMED DRC and Stepan 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 DRC and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HUTCHMED DRC and Stepan Company, you can compare the effects of market volatilities on HUTCHMED DRC and Stepan 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 DRC with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUTCHMED DRC and Stepan.
Diversification Opportunities for HUTCHMED DRC and Stepan
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between HUTCHMED and Stepan is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and HUTCHMED DRC 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 DRC are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and Stepan go up and down completely randomly.
Pair Corralation between HUTCHMED DRC and Stepan
Considering the 90-day investment horizon HUTCHMED DRC is expected to under-perform the Stepan. In addition to that, HUTCHMED DRC is 1.3 times more volatile than Stepan Company. It trades about -0.13 of its total potential returns per unit of risk. Stepan Company is currently generating about 0.13 per unit of volatility. If you would invest 7,252 in Stepan Company on September 2, 2024 and sell it today you would earn a total of 438.00 from holding Stepan Company or generate 6.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HUTCHMED DRC vs. Stepan Company
Performance |
| Timeline |
| HUTCHMED DRC |
| Stepan Company |
HUTCHMED DRC and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HUTCHMED DRC and Stepan
The main advantage of trading using opposite HUTCHMED DRC and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUTCHMED DRC position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| HUTCHMED DRC vs. ANI Pharmaceuticals | HUTCHMED DRC vs. Phibro Animal Health | HUTCHMED DRC vs. Prestige Brand Holdings | HUTCHMED DRC vs. Pacira BioSciences, |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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