Correlation Between HP and Ambase Corp

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

By analyzing existing cross correlation between HP Inc and Ambase Corp, you can compare the effects of market volatilities on HP and Ambase Corp 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 HP with a short position of Ambase Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Ambase Corp.

Diversification Opportunities for HP and Ambase Corp

-0.75

Correlation Coefficient

HP  Ambase Corp

Pay attention - limited upside

The 3 months correlation between HP and Ambase is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Ambase Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambase Corp and HP 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 HP Inc are associated (or correlated) with Ambase Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambase Corp has no effect on the direction of HP i.e., HP and Ambase Corp go up and down completely randomly.

Pair Corralation between HP and Ambase Corp

Considering the 90-day investment horizon HP Inc is expected to generate 0.56 times more return on investment than Ambase Corp. However, HP Inc is 1.79 times less risky than Ambase Corp. It trades about 0.02 of its potential returns per unit of risk. Ambase Corp is currently generating about 0.0 per unit of risk. If you would invest  3,509  in HP Inc on September 3, 2024 and sell it today you would earn a total of  34.00  from holding HP Inc or generate 0.97% return on investment over 90 days.

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

HP Inc  vs.  Ambase Corp

HP Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HP Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, HP is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ambase Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with HP and Ambase Corp

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

The idea behind HP Inc and Ambase Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.