Correlation Between Hewlett Packard and EMCORE

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

Diversification Opportunities for Hewlett Packard and EMCORE

-0.15

Correlation Coefficient

Hewlett Packard  EMCORE

Good diversification

The 3 months correlation between Hewlett and EMCORE is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Enterprise and EMCORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCORE 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 EMCORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCORE has no effect on the direction of Hewlett Packard i.e., Hewlett Packard and EMCORE go up and down completely randomly.

Pair Corralation between Hewlett Packard and EMCORE

Considering the 90-day investment horizon Hewlett Packard Enterprise is expected to under-perform the EMCORE. In addition to that, Hewlett Packard is 4.77 times more volatile than EMCORE. It trades about -0.15 of its total potential returns per unit of risk. EMCORE is currently generating about 0.05 per unit of volatility. If you would invest  306.00  in EMCORE on December 26, 2024 and sell it today you would earn a total of  4.00  from holding EMCORE or generate 1.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.33%
Values	Daily Returns

Hewlett Packard Enterprise  vs.  EMCORE

Hewlett Packard Ente

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hewlett Packard Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

EMCORE

Risk-Adjusted Performance

Insignificant

Over the last 90 days EMCORE has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, EMCORE is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Hewlett Packard and EMCORE

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

The idea behind Hewlett Packard Enterprise and EMCORE 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.