Correlation Between Aluminumof China and Hewlett Packard

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

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

Diversification Opportunities for Aluminumof China and Hewlett Packard

-0.54

Correlation Coefficient

Aluminumof China  Hewlett Packard

Excellent diversification

The 3 months correlation between Aluminumof and Hewlett is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and Hewlett Packard Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hewlett Packard Ente and Aluminumof China 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 Aluminum of are associated (or correlated) with Hewlett Packard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hewlett Packard Ente has no effect on the direction of Aluminumof China i.e., Aluminumof China and Hewlett Packard go up and down completely randomly.

Pair Corralation between Aluminumof China and Hewlett Packard

Assuming the 90 days horizon Aluminumof China is expected to generate 1.63 times less return on investment than Hewlett Packard. In addition to that, Aluminumof China is 1.51 times more volatile than Hewlett Packard Enterprise. It trades about 0.04 of its total potential returns per unit of risk. Hewlett Packard Enterprise is currently generating about 0.1 per unit of volatility. If you would invest  6,379  in Hewlett Packard Enterprise on October 26, 2024 and sell it today you would earn a total of  556.00  from holding Hewlett Packard Enterprise or generate 8.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

Aluminum of  vs.  Hewlett Packard Enterprise

Aluminumof China

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hewlett Packard Ente

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Hewlett Packard exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aluminumof China and Hewlett Packard

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

The idea behind Aluminum of and Hewlett Packard Enterprise 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.