Correlation Between Prestige Brand and HUTCHMED DRC
Can any of the company-specific risk be diversified away by investing in both Prestige Brand 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 Prestige Brand and HUTCHMED DRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prestige Brand Holdings and HUTCHMED DRC, you can compare the effects of market volatilities on Prestige Brand 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 Prestige Brand with a short position of HUTCHMED DRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Brand and HUTCHMED DRC.
Diversification Opportunities for Prestige Brand and HUTCHMED DRC
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prestige and HUTCHMED is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Brand Holdings and HUTCHMED DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHMED DRC and Prestige Brand 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 Prestige Brand Holdings 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 Prestige Brand i.e., Prestige Brand and HUTCHMED DRC go up and down completely randomly.
Pair Corralation between Prestige Brand and HUTCHMED DRC
Considering the 90-day investment horizon Prestige Brand Holdings is expected to generate 0.34 times more return on investment than HUTCHMED DRC. However, Prestige Brand Holdings is 2.94 times less risky than HUTCHMED DRC. It trades about 0.0 of its potential returns per unit of risk. HUTCHMED DRC is currently generating about -0.03 per unit of risk. If you would invest 7,866 in Prestige Brand Holdings on October 20, 2024 and sell it today you would lose (8.00) from holding Prestige Brand Holdings or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prestige Brand Holdings vs. HUTCHMED DRC
Performance |
| Timeline |
| Prestige Brand Holdings |
| HUTCHMED DRC |
Prestige Brand and HUTCHMED DRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prestige Brand and HUTCHMED DRC
The main advantage of trading using opposite Prestige Brand and HUTCHMED DRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Brand 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.| Prestige Brand vs. Evotec SE ADR | Prestige Brand vs. Supernus Pharmaceuticals | Prestige Brand vs. Collegium Pharmaceutical | Prestige Brand vs. Regencell Bioscience Holdings |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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