Correlation Between Celestica and Hewlett Packard

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

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

Diversification Opportunities for Celestica and Hewlett Packard

0.56

Correlation Coefficient

Celestica  Hewlett Packard

Very weak diversification

The 3 months correlation between Celestica and Hewlett is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Celestica 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 Celestica 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 Celestica 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 Celestica i.e., Celestica and Hewlett Packard go up and down completely randomly.

Pair Corralation between Celestica and Hewlett Packard

Considering the 90-day investment horizon Celestica is expected to generate 1.32 times more return on investment than Hewlett Packard. However, Celestica is 1.32 times more volatile than Hewlett Packard Enterprise. It trades about 0.13 of its potential returns per unit of risk. Hewlett Packard Enterprise is currently generating about 0.0 per unit of risk. If you would invest  8,585  in Celestica on October 9, 2024 and sell it today you would earn a total of  1,291  from holding Celestica or generate 15.04% return on investment over 90 days.

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

Celestica  vs.  Hewlett Packard Enterprise

Celestica

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hewlett Packard Ente

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Hewlett Packard is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Celestica and Hewlett Packard

The main advantage of trading using opposite Celestica and Hewlett Packard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica 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 Celestica 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.