Correlation Between Vast Renewables and HUTCHMED DRC
Can any of the company-specific risk be diversified away by investing in both Vast Renewables 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 Vast Renewables and HUTCHMED DRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vast Renewables Limited and HUTCHMED DRC, you can compare the effects of market volatilities on Vast Renewables 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 Vast Renewables with a short position of HUTCHMED DRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vast Renewables and HUTCHMED DRC.
Diversification Opportunities for Vast Renewables and HUTCHMED DRC
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vast and HUTCHMED is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Vast Renewables Limited and HUTCHMED DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHMED DRC and Vast Renewables 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 Vast Renewables Limited 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 Vast Renewables i.e., Vast Renewables and HUTCHMED DRC go up and down completely randomly.
Pair Corralation between Vast Renewables and HUTCHMED DRC
Assuming the 90 days horizon Vast Renewables Limited is expected to generate 4.62 times more return on investment than HUTCHMED DRC. However, Vast Renewables is 4.62 times more volatile than HUTCHMED DRC. It trades about 0.21 of its potential returns per unit of risk. HUTCHMED DRC is currently generating about -0.05 per unit of risk. If you would invest 5.00 in Vast Renewables Limited on September 12, 2024 and sell it today you would earn a total of 2.70 from holding Vast Renewables Limited or generate 54.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vast Renewables Limited vs. HUTCHMED DRC
Performance |
| Timeline |
| Vast Renewables |
| HUTCHMED DRC |
Vast Renewables and HUTCHMED DRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vast Renewables and HUTCHMED DRC
The main advantage of trading using opposite Vast Renewables and HUTCHMED DRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vast Renewables 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.| Vast Renewables vs. Asure Software | Vast Renewables vs. BCE Inc | Vast Renewables vs. Ziff Davis | Vast Renewables vs. Anterix |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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