Correlation Between HUTCHMED DRC and Stepstone

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

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

Diversification Opportunities for HUTCHMED DRC and Stepstone

0.36

Correlation Coefficient

HUTCHMED DRC  Stepstone

Weak diversification

The 3 months correlation between HUTCHMED and Stepstone is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding HUTCHMED DRC and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group 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 Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of HUTCHMED DRC i.e., HUTCHMED DRC and Stepstone go up and down completely randomly.

Pair Corralation between HUTCHMED DRC and Stepstone

Considering the 90-day investment horizon HUTCHMED DRC is expected to generate 1.39 times more return on investment than Stepstone. However, HUTCHMED DRC is 1.39 times more volatile than Stepstone Group. It trades about 0.09 of its potential returns per unit of risk. Stepstone Group is currently generating about 0.06 per unit of risk. If you would invest  1,512  in HUTCHMED DRC on May 5, 2025 and sell it today you would earn a total of  215.00  from holding HUTCHMED DRC or generate 14.22% return on investment over 90 days.

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

HUTCHMED DRC  vs.  Stepstone Group

HUTCHMED DRC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HUTCHMED DRC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, HUTCHMED DRC displayed solid returns over the last few months and may actually be approaching a breakup point.

Stepstone Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Stepstone may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with HUTCHMED DRC and Stepstone

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

The idea behind HUTCHMED DRC and Stepstone Group 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.