Correlation Between ADC Therapeutics and HP
Can any of the company-specific risk be diversified away by investing in both ADC Therapeutics and HP 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 ADC Therapeutics and HP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADC Therapeutics SA and HP Inc, you can compare the effects of market volatilities on ADC Therapeutics and HP 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 ADC Therapeutics with a short position of HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADC Therapeutics and HP.
Diversification Opportunities for ADC Therapeutics and HP
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between ADC and HP is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding ADC Therapeutics SA and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc and ADC Therapeutics 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 ADC Therapeutics SA are associated (or correlated) with HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of ADC Therapeutics i.e., ADC Therapeutics and HP go up and down completely randomly.
Pair Corralation between ADC Therapeutics and HP
Given the investment horizon of 90 days ADC Therapeutics SA is expected to generate 3.55 times more return on investment than HP. However, ADC Therapeutics is 3.55 times more volatile than HP Inc. It trades about 0.0 of its potential returns per unit of risk. HP Inc is currently generating about -0.01 per unit of risk. If you would invest 1,315 in ADC Therapeutics SA on December 30, 2023 and sell it today you would lose (866.00) from holding ADC Therapeutics SA or give up 65.86% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
ADC Therapeutics SA vs. HP Inc
Performance |
Timeline |
ADC Therapeutics |
HP Inc |
ADC Therapeutics and HP Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ADC Therapeutics and HP
The main advantage of trading using opposite ADC Therapeutics and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADC Therapeutics position performs unexpectedly, HP 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 HP will offset losses from the drop in HP's long position.ADC Therapeutics vs. Desktop Metal | ADC Therapeutics vs. Fabrinet | ADC Therapeutics vs. Markforged Holding Corp | ADC Therapeutics vs. Ebang International Holdings |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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