Correlation Between Hewlett Packard and ELMOS SEMICONDUCTOR

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

By analyzing existing cross correlation between Hewlett Packard Enterprise and ELMOS SEMICONDUCTOR, you can compare the effects of market volatilities on Hewlett Packard and ELMOS SEMICONDUCTOR 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 Hewlett Packard with a short position of ELMOS SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hewlett Packard and ELMOS SEMICONDUCTOR.

Diversification Opportunities for Hewlett Packard and ELMOS SEMICONDUCTOR

0.74

Correlation Coefficient

Hewlett Packard  ELMOS SEMICONDUCTOR

Poor diversification

The 3 months correlation between Hewlett and ELMOS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Enterprise and ELMOS SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELMOS SEMICONDUCTOR and Hewlett Packard 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 Hewlett Packard Enterprise are associated (or correlated) with ELMOS SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELMOS SEMICONDUCTOR has no effect on the direction of Hewlett Packard i.e., Hewlett Packard and ELMOS SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between Hewlett Packard and ELMOS SEMICONDUCTOR

Assuming the 90 days horizon Hewlett Packard Enterprise is expected to under-perform the ELMOS SEMICONDUCTOR. In addition to that, Hewlett Packard is 1.04 times more volatile than ELMOS SEMICONDUCTOR. It trades about -0.16 of its total potential returns per unit of risk. ELMOS SEMICONDUCTOR is currently generating about -0.04 per unit of volatility. If you would invest  6,860  in ELMOS SEMICONDUCTOR on December 30, 2024 and sell it today you would lose (690.00) from holding ELMOS SEMICONDUCTOR or give up 10.06% of portfolio value over 90 days.

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

Hewlett Packard Enterprise  vs.  ELMOS SEMICONDUCTOR

Hewlett Packard Ente

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hewlett Packard Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ELMOS SEMICONDUCTOR

Risk-Adjusted Performance

Very Weak

Over the last 90 days ELMOS SEMICONDUCTOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Hewlett Packard and ELMOS SEMICONDUCTOR

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

The idea behind Hewlett Packard Enterprise and ELMOS SEMICONDUCTOR 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.