Correlation Between ADC Therapeutics and HP

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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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ADC Therapeutics SA  vs.  HP Inc

 Performance 
       Timeline  
ADC Therapeutics 

Risk-Adjusted Performance

19 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in ADC Therapeutics SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, ADC Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.
HP Inc 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in HP Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, HP is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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.
The idea behind ADC Therapeutics SA and HP Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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