Correlation Between Hewlett Packard and TELES Informationstech

Can any of the company-specific risk be diversified away by investing in both Hewlett Packard and TELES Informationstech 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 TELES Informationstech 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 TELES Informationstechnologien AG, you can compare the effects of market volatilities on Hewlett Packard and TELES Informationstech 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 TELES Informationstech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hewlett Packard and TELES Informationstech.

Diversification Opportunities for Hewlett Packard and TELES Informationstech

-0.71

Correlation Coefficient

Hewlett Packard  TELES Informationstech

Pay attention - limited upside

The 3 months correlation between Hewlett and TELES is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Enterprise and TELES Informationstechnologien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELES Informationstech 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 TELES Informationstech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELES Informationstech has no effect on the direction of Hewlett Packard i.e., Hewlett Packard and TELES Informationstech go up and down completely randomly.

Pair Corralation between Hewlett Packard and TELES Informationstech

Assuming the 90 days horizon Hewlett Packard Enterprise is expected to generate 0.96 times more return on investment than TELES Informationstech. However, Hewlett Packard Enterprise is 1.04 times less risky than TELES Informationstech. It trades about 0.1 of its potential returns per unit of risk. TELES Informationstechnologien AG is currently generating about -0.15 per unit of risk. If you would invest  1,746  in Hewlett Packard Enterprise on August 31, 2024 and sell it today you would earn a total of  276.00  from holding Hewlett Packard Enterprise or generate 15.81% return on investment over 90 days.

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

Hewlett Packard Enterprise  vs.  TELES Informationstechnologien

Hewlett Packard Ente

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Hewlett Packard reported solid returns over the last few months and may actually be approaching a breakup point.

TELES Informationstech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TELES Informationstechnologien AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Hewlett Packard and TELES Informationstech

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

The idea behind Hewlett Packard Enterprise and TELES Informationstechnologien AG 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.