Correlation Between HPQ Silicon and Senvest Capital

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

Diversification Opportunities for HPQ Silicon and Senvest Capital

-0.42

Correlation Coefficient

HPQ Silicon  Senvest Capital

Very good diversification

The 3 months correlation between HPQ and Senvest is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding HPQ Silicon Resources and Senvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senvest Capital 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 Senvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senvest Capital has no effect on the direction of HPQ Silicon i.e., HPQ Silicon and Senvest Capital go up and down completely randomly.

Pair Corralation between HPQ Silicon and Senvest Capital

Assuming the 90 days horizon HPQ Silicon Resources is expected to generate 3.39 times more return on investment than Senvest Capital. However, HPQ Silicon is 3.39 times more volatile than Senvest Capital. It trades about 0.01 of its potential returns per unit of risk. Senvest Capital is currently generating about 0.03 per unit of risk. If you would invest  28.00  in HPQ Silicon Resources on October 22, 2024 and sell it today you would lose (3.00) from holding HPQ Silicon Resources or give up 10.71% of portfolio value over 90 days.

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

HPQ Silicon Resources  vs.  Senvest Capital

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.

Senvest Capital

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Senvest Capital are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Senvest Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HPQ Silicon and Senvest Capital

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

The idea behind HPQ Silicon Resources and Senvest Capital 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.