Correlation Between HPQ Silicon and Themac Resources

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

By analyzing existing cross correlation between HPQ Silicon Resources and Themac Resources Group, you can compare the effects of market volatilities on HPQ Silicon and Themac Resources 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 HPQ Silicon with a short position of Themac Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of HPQ Silicon and Themac Resources.

Diversification Opportunities for HPQ Silicon and Themac Resources

0.11

Correlation Coefficient

HPQ Silicon  Themac Resources

Average diversification

The 3 months correlation between HPQ and Themac is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding HPQ Silicon Resources and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources and HPQ Silicon 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 HPQ Silicon Resources are associated (or correlated) with Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of HPQ Silicon i.e., HPQ Silicon and Themac Resources go up and down completely randomly.

Pair Corralation between HPQ Silicon and Themac Resources

Assuming the 90 days horizon HPQ Silicon is expected to generate 10.34 times less return on investment than Themac Resources. But when comparing it to its historical volatility, HPQ Silicon Resources is 2.45 times less risky than Themac Resources. It trades about 0.01 of its potential returns per unit of risk. Themac Resources Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Themac Resources Group on October 4, 2024 and sell it today you would lose (2.00) from holding Themac Resources Group or give up 33.33% of portfolio value over 90 days.

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

HPQ Silicon Resources  vs.  Themac Resources Group

HPQ Silicon Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HPQ Silicon Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Themac Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Themac Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HPQ Silicon and Themac Resources

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

The idea behind HPQ Silicon Resources and Themac Resources Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.