Correlation Between AstraZeneca PLC and HUTCHMED DRC
Can any of the company-specific risk be diversified away by investing in both AstraZeneca PLC 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 AstraZeneca PLC and HUTCHMED DRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AstraZeneca PLC ADR and HUTCHMED DRC, you can compare the effects of market volatilities on AstraZeneca PLC 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 AstraZeneca PLC with a short position of HUTCHMED DRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and HUTCHMED DRC.
Diversification Opportunities for AstraZeneca PLC and HUTCHMED DRC
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AstraZeneca and HUTCHMED is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC ADR and HUTCHMED DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHMED DRC and AstraZeneca PLC 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 AstraZeneca PLC ADR 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 AstraZeneca PLC i.e., AstraZeneca PLC and HUTCHMED DRC go up and down completely randomly.
Pair Corralation between AstraZeneca PLC and HUTCHMED DRC
Considering the 90-day investment horizon AstraZeneca PLC ADR is expected to generate 0.35 times more return on investment than HUTCHMED DRC. However, AstraZeneca PLC ADR is 2.82 times less risky than HUTCHMED DRC. It trades about 0.2 of its potential returns per unit of risk. HUTCHMED DRC is currently generating about -0.09 per unit of risk. If you would invest 6,573 in AstraZeneca PLC ADR on January 20, 2024 and sell it today you would earn a total of 263.00 from holding AstraZeneca PLC ADR or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AstraZeneca PLC ADR vs. HUTCHMED DRC
Performance |
| Timeline |
| AstraZeneca PLC ADR |
| HUTCHMED DRC |
AstraZeneca PLC and HUTCHMED DRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AstraZeneca PLC and HUTCHMED DRC
The main advantage of trading using opposite AstraZeneca PLC and HUTCHMED DRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AstraZeneca PLC 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.| AstraZeneca PLC vs. Alkermes Plc | AstraZeneca PLC vs. Ironwood Pharmaceuticals | AstraZeneca PLC vs. Deciphera Pharmaceuticals LLC | AstraZeneca PLC vs. Eagle Pharmaceuticals |
| HUTCHMED DRC vs. Alkermes Plc | HUTCHMED DRC vs. Ironwood Pharmaceuticals | HUTCHMED DRC vs. Deciphera Pharmaceuticals LLC | HUTCHMED DRC vs. Eagle Pharmaceuticals |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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