Correlation Between HP and 482480AM2

Can any of the company-specific risk be diversified away by investing in both HP and 482480AM2 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 482480AM2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HP Inc and KLAC 495 15 JUL 52, you can compare the effects of market volatilities on HP and 482480AM2 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 482480AM2. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and 482480AM2.

Diversification Opportunities for HP and 482480AM2

-0.42

Correlation Coefficient

HP  482480AM2

Very good diversification

The 3 months correlation between HP and 482480AM2 is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and KLAC 495 15 JUL 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLAC 495 15 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 482480AM2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLAC 495 15 has no effect on the direction of HP i.e., HP and 482480AM2 go up and down completely randomly.

Pair Corralation between HP and 482480AM2

Considering the 90-day investment horizon HP Inc is expected to under-perform the 482480AM2. In addition to that, HP is 1.44 times more volatile than KLAC 495 15 JUL 52. It trades about -0.14 of its total potential returns per unit of risk. KLAC 495 15 JUL 52 is currently generating about 0.1 per unit of volatility. If you would invest  9,127  in KLAC 495 15 JUL 52 on December 30, 2024 and sell it today you would earn a total of  664.00  from holding KLAC 495 15 JUL 52 or generate 7.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

HP Inc  vs.  KLAC 495 15 JUL 52

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.

KLAC 495 15

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KLAC 495 15 JUL 52 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, 482480AM2 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HP and 482480AM2

The main advantage of trading using opposite HP and 482480AM2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, 482480AM2 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 482480AM2 will offset losses from the drop in 482480AM2's long position.

The idea behind HP Inc and KLAC 495 15 JUL 52 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.