Correlation Between WK Kellogg and HUTCHMED DRC
Can any of the company-specific risk be diversified away by investing in both WK Kellogg 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 WK Kellogg and HUTCHMED DRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WK Kellogg Co and HUTCHMED DRC, you can compare the effects of market volatilities on WK Kellogg 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 WK Kellogg with a short position of HUTCHMED DRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and HUTCHMED DRC.
Diversification Opportunities for WK Kellogg and HUTCHMED DRC
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KLG and HUTCHMED is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and HUTCHMED DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHMED DRC and WK Kellogg 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 WK Kellogg Co 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 WK Kellogg i.e., WK Kellogg and HUTCHMED DRC go up and down completely randomly.
Pair Corralation between WK Kellogg and HUTCHMED DRC
Considering the 90-day investment horizon WK Kellogg Co is expected to generate 0.72 times more return on investment than HUTCHMED DRC. However, WK Kellogg Co is 1.38 times less risky than HUTCHMED DRC. It trades about -0.08 of its potential returns per unit of risk. HUTCHMED DRC is currently generating about -0.07 per unit of risk. If you would invest 1,775 in WK Kellogg Co on October 29, 2024 and sell it today you would lose (77.00) from holding WK Kellogg Co or give up 4.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WK Kellogg Co vs. HUTCHMED DRC
Performance |
| Timeline |
| WK Kellogg |
| HUTCHMED DRC |
WK Kellogg and HUTCHMED DRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WK Kellogg and HUTCHMED DRC
The main advantage of trading using opposite WK Kellogg and HUTCHMED DRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WK Kellogg 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.| WK Kellogg vs. Dine Brands Global | WK Kellogg vs. NH Foods Ltd | WK Kellogg vs. Bridgford Foods | WK Kellogg vs. SunOpta |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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