Correlation Between HP and NGEx Minerals

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

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

Diversification Opportunities for HP and NGEx Minerals

0.26

Correlation Coefficient

HP  NGEx Minerals

Modest diversification

The 3 months correlation between HP and NGEx is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and NGEx Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGEx Minerals 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 NGEx Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGEx Minerals has no effect on the direction of HP i.e., HP and NGEx Minerals go up and down completely randomly.

Pair Corralation between HP and NGEx Minerals

Considering the 90-day investment horizon HP Inc is expected to under-perform the NGEx Minerals. But the stock apears to be less risky and, when comparing its historical volatility, HP Inc is 1.41 times less risky than NGEx Minerals. The stock trades about -0.13 of its potential returns per unit of risk. The NGEx Minerals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  965.00  in NGEx Minerals on December 26, 2024 and sell it today you would lose (1.00) from holding NGEx Minerals or give up 0.1% 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.  NGEx Minerals

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.

NGEx Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days NGEx Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NGEx Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HP and NGEx Minerals

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

The idea behind HP Inc and NGEx Minerals 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.