Correlation Between HPQ Silicon and Nano One

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

Diversification Opportunities for HPQ Silicon and Nano One

0.58

Correlation Coefficient

HPQ Silicon  Nano One

Very weak diversification

The 3 months correlation between HPQ and Nano is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding HPQ Silicon Resources and Nano One Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano One Materials 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 Nano One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano One Materials has no effect on the direction of HPQ Silicon i.e., HPQ Silicon and Nano One go up and down completely randomly.

Pair Corralation between HPQ Silicon and Nano One

Assuming the 90 days horizon HPQ Silicon Resources is expected to under-perform the Nano One. But the stock apears to be less risky and, when comparing its historical volatility, HPQ Silicon Resources is 1.1 times less risky than Nano One. The stock trades about -0.02 of its potential returns per unit of risk. The Nano One Materials is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  81.00  in Nano One Materials on October 25, 2024 and sell it today you would earn a total of  4.00  from holding Nano One Materials or generate 4.94% return on investment over 90 days.

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

HPQ Silicon Resources  vs.  Nano One Materials

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.

Nano One Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nano One Materials 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 very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with HPQ Silicon and Nano One

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

The idea behind HPQ Silicon Resources and Nano One Materials 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.