Correlation Between HP and StarTek

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

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

Diversification Opportunities for HP and StarTek

-0.55

Correlation Coefficient

HP  StarTek

Excellent diversification

The 3 months correlation between HP and StarTek is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and StarTek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StarTek 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 StarTek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StarTek has no effect on the direction of HP i.e., HP and StarTek go up and down completely randomly.

Pair Corralation between HP and StarTek

If you would invest  3,509  in HP Inc on September 2, 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	Very Weak
Accuracy	1.56%
Values	Daily Returns

HP Inc  vs.  StarTek

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

StarTek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StarTek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, StarTek is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HP and StarTek

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

The idea behind HP Inc and StarTek 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.