Correlation Between HP and Gan

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

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

Diversification Opportunities for HP and Gan

0.23

Correlation Coefficient

HP  Gan

Modest diversification

The 3 months correlation between HP and Gan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Gan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan 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 Gan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan has no effect on the direction of HP i.e., HP and Gan go up and down completely randomly.

Pair Corralation between HP and Gan

Considering the 90-day investment horizon HP Inc is expected to under-perform the Gan. In addition to that, HP is 1.39 times more volatile than Gan. It trades about -0.13 of its total potential returns per unit of risk. Gan is currently generating about -0.05 per unit of volatility. If you would invest  183.00  in Gan on December 25, 2024 and sell it today you would lose (7.00) from holding Gan or give up 3.83% of portfolio value over 90 days.

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

HP Inc  vs.  Gan

HP Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days HP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Gan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Gan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with HP and Gan

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

The idea behind HP Inc and Gan 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 Global Correlations module to find global opportunities by holding instruments from different markets.