Correlation Between HUTCHMED DRC and Aquestive Therapeutics

Can any of the company-specific risk be diversified away by investing in both HUTCHMED DRC and Aquestive Therapeutics 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 Aquestive Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HUTCHMED DRC and Aquestive Therapeutics, you can compare the effects of market volatilities on HUTCHMED DRC and Aquestive Therapeutics 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 Aquestive Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUTCHMED DRC and Aquestive Therapeutics.

Diversification Opportunities for HUTCHMED DRC and Aquestive Therapeutics

0.5

Correlation Coefficient

HUTCHMED DRC  Aquestive Therapeutics

Very weak diversification

The 3 months correlation between HUTCHMED and Aquestive is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics 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 Aquestive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquestive Therapeutics has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and Aquestive Therapeutics go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and Aquestive Therapeutics

Considering the 90-day investment horizon HUTCHMED DRC is expected to generate 0.85 times more return on investment than Aquestive Therapeutics. However, HUTCHMED DRC is 1.17 times less risky than Aquestive Therapeutics. It trades about -0.09 of its potential returns per unit of risk. Aquestive Therapeutics is currently generating about -0.23 per unit of risk. If you would invest  1,674  in HUTCHMED DRC on September 16, 2024 and sell it today you would lose (116.00) from holding HUTCHMED DRC or give up 6.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

HUTCHMED DRC  vs.  Aquestive Therapeutics

HUTCHMED DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUTCHMED DRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, HUTCHMED DRC is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Aquestive Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquestive Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with HUTCHMED DRC and Aquestive Therapeutics

The main advantage of trading using opposite HUTCHMED DRC and Aquestive Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUTCHMED DRC position performs unexpectedly, Aquestive Therapeutics 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 Aquestive Therapeutics will offset losses from the drop in Aquestive Therapeutics' long position.

The idea behind HUTCHMED DRC and Aquestive Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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.