Correlation Between HP and Sharing Services

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

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

Diversification Opportunities for HP and Sharing Services

-0.69

Correlation Coefficient

HP  Sharing Services

Excellent diversification

The 3 months correlation between HP and Sharing is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Sharing Services Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharing Services Global 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 Sharing Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharing Services Global has no effect on the direction of HP i.e., HP and Sharing Services go up and down completely randomly.

Pair Corralation between HP and Sharing Services

Considering the 90-day investment horizon HP Inc is expected to generate 0.12 times more return on investment than Sharing Services. However, HP Inc is 8.3 times less risky than Sharing Services. It trades about 0.02 of its potential returns per unit of risk. Sharing Services Global is currently generating about -0.04 per unit of risk. If you would invest  3,509  in HP Inc on September 1, 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.  Sharing Services Global

HP Inc

Risk-Adjusted Performance

1 of 100

Very 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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Sharing Services Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sharing Services Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with HP and Sharing Services

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

The idea behind HP Inc and Sharing Services Global 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.