Correlation Between HP and OPY Acquisition

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

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

Diversification Opportunities for HP and OPY Acquisition

-0.43

Correlation Coefficient

HP  OPY Acquisition

Very good diversification

The 3 months correlation between HP and OPY is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and OPY Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPY Acquisition I 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 OPY Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPY Acquisition I has no effect on the direction of HP i.e., HP and OPY Acquisition go up and down completely randomly.

Pair Corralation between HP and OPY Acquisition

Considering the 90-day investment horizon HP Inc is expected to generate 20.76 times more return on investment than OPY Acquisition. However, HP is 20.76 times more volatile than OPY Acquisition I. It trades about 0.03 of its potential returns per unit of risk. OPY Acquisition I is currently generating about 0.11 per unit of risk. If you would invest  2,913  in HP Inc on September 19, 2024 and sell it today you would earn a total of  506.00  from holding HP Inc or generate 17.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	9.69%
Values	Daily Returns

HP Inc  vs.  OPY Acquisition I

HP Inc

Risk-Adjusted Performance

0 of 100

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 relatively invariable basic indicators, HP is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

OPY Acquisition I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OPY Acquisition I has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, OPY Acquisition is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HP and OPY Acquisition

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

The idea behind HP Inc and OPY Acquisition I 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.