Correlation Between Datalogic SpA and HP

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

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

Diversification Opportunities for Datalogic SpA and HP

0.38

Correlation Coefficient

Datalogic SpA  HP

Weak diversification

The 3 months correlation between Datalogic and HP is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Datalogic SpA and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc and Datalogic SpA 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 Datalogic SpA are associated (or correlated) with HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Datalogic SpA i.e., Datalogic SpA and HP go up and down completely randomly.

Pair Corralation between Datalogic SpA and HP

Assuming the 90 days trading horizon Datalogic SpA is expected to generate 1.28 times more return on investment than HP. However, Datalogic SpA is 1.28 times more volatile than HP Inc. It trades about -0.08 of its potential returns per unit of risk. HP Inc is currently generating about -0.14 per unit of risk. If you would invest  497.00  in Datalogic SpA on December 29, 2024 and sell it today you would lose (62.00) from holding Datalogic SpA or give up 12.47% of portfolio value over 90 days.

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

Datalogic SpA  vs.  HP Inc

Datalogic SpA

Risk-Adjusted Performance

Very Weak

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

HP Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days HP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Pair Trading with Datalogic SpA and HP

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

The idea behind Datalogic SpA and HP Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..