Correlation Between Casa Systems and Hewlett Packard

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

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

Diversification Opportunities for Casa Systems and Hewlett Packard

-0.17

Correlation Coefficient

Casa Systems  Hewlett Packard

Good diversification

The 3 months correlation between Casa and Hewlett is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Casa Systems 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 Casa Systems 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 Casa Systems 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 Casa Systems i.e., Casa Systems and Hewlett Packard go up and down completely randomly.

Pair Corralation between Casa Systems and Hewlett Packard

If you would invest  1,892  in Hewlett Packard Enterprise on September 3, 2024 and sell it today you would earn a total of  233.00  from holding Hewlett Packard Enterprise or generate 12.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Casa Systems  vs.  Hewlett Packard Enterprise

Casa Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Casa Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Casa Systems is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Hewlett Packard Ente

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Hewlett Packard exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Casa Systems and Hewlett Packard

The main advantage of trading using opposite Casa Systems and Hewlett Packard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casa Systems 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 Casa Systems 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.