Correlation Between Hewlett Packard and Mader Group

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

Diversification Opportunities for Hewlett Packard and Mader Group

0.13

Correlation Coefficient

Hewlett Packard  Mader Group

Average diversification

The 3 months correlation between Hewlett and Mader is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Enterprise and Mader Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mader Group Limited 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 Mader Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mader Group Limited has no effect on the direction of Hewlett Packard i.e., Hewlett Packard and Mader Group go up and down completely randomly.

Pair Corralation between Hewlett Packard and Mader Group

Assuming the 90 days trading horizon Hewlett Packard is expected to generate 1.16 times less return on investment than Mader Group. In addition to that, Hewlett Packard is 2.48 times more volatile than Mader Group Limited. It trades about 0.04 of its total potential returns per unit of risk. Mader Group Limited is currently generating about 0.13 per unit of volatility. If you would invest  334.00  in Mader Group Limited on October 11, 2024 and sell it today you would earn a total of  23.00  from holding Mader Group Limited or generate 6.89% return on investment over 90 days.

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

Hewlett Packard Enterprise  vs.  Mader Group Limited

Hewlett Packard Ente

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 3 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Mader Group Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mader Group Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Mader Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hewlett Packard and Mader Group

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

The idea behind Hewlett Packard Enterprise and Mader Group Limited 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.