Correlation Between HPQ Silicon and Group Eleven

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

Diversification Opportunities for HPQ Silicon and Group Eleven

0.76

Correlation Coefficient

HPQ Silicon  Group Eleven

Poor diversification

The 3 months correlation between HPQ and Group is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding HPQ Silicon Resources and Group Eleven Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group Eleven 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 Group Eleven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group Eleven Resources has no effect on the direction of HPQ Silicon i.e., HPQ Silicon and Group Eleven go up and down completely randomly.

Pair Corralation between HPQ Silicon and Group Eleven

Assuming the 90 days horizon HPQ Silicon is expected to generate 6.44 times less return on investment than Group Eleven. But when comparing it to its historical volatility, HPQ Silicon Resources is 1.44 times less risky than Group Eleven. It trades about 0.01 of its potential returns per unit of risk. Group Eleven Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Group Eleven Resources on September 30, 2024 and sell it today you would earn a total of  10.00  from holding Group Eleven Resources or generate 142.86% return on investment over 90 days.

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

HPQ Silicon Resources  vs.  Group Eleven Resources

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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Group Eleven Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Group Eleven Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with HPQ Silicon and Group Eleven

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

The idea behind HPQ Silicon Resources and Group Eleven Resources 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.