Correlation Between PURETECH HEALTH and HP

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

By analyzing existing cross correlation between PURETECH HEALTH PLC and HP Inc, you can compare the effects of market volatilities on PURETECH HEALTH 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 PURETECH HEALTH with a short position of HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of PURETECH HEALTH and HP.

Diversification Opportunities for PURETECH HEALTH and HP

0.53

Correlation Coefficient

PURETECH HEALTH  HP

Very weak diversification

The 3 months correlation between PURETECH and HP is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding PURETECH HEALTH PLC and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc and PURETECH HEALTH 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 PURETECH HEALTH PLC 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 PURETECH HEALTH i.e., PURETECH HEALTH and HP go up and down completely randomly.

Pair Corralation between PURETECH HEALTH and HP

Assuming the 90 days horizon PURETECH HEALTH PLC is expected to under-perform the HP. In addition to that, PURETECH HEALTH is 1.52 times more volatile than HP Inc. It trades about -0.02 of its total potential returns per unit of risk. HP Inc is currently generating about 0.03 per unit of volatility. If you would invest  2,583  in HP Inc on October 27, 2024 and sell it today you would earn a total of  537.00  from holding HP Inc or generate 20.79% return on investment over 90 days.

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

PURETECH HEALTH PLC  vs.  HP Inc

PURETECH HEALTH PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PURETECH HEALTH PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

HP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PURETECH HEALTH and HP

The main advantage of trading using opposite PURETECH HEALTH and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PURETECH HEALTH 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 PURETECH HEALTH PLC 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.