Correlation Between HP and TOTAL

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

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

Diversification Opportunities for HP and TOTAL

-0.27

Correlation Coefficient

HP  TOTAL

Very good diversification

The 3 months correlation between HP and TOTAL is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and TOTAL CAPITAL INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL CAPITAL INTERN 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 TOTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL CAPITAL INTERN has no effect on the direction of HP i.e., HP and TOTAL go up and down completely randomly.

Pair Corralation between HP and TOTAL

Considering the 90-day investment horizon HP Inc is expected to under-perform the TOTAL. In addition to that, HP is 1.04 times more volatile than TOTAL CAPITAL INTERNATIONAL. It trades about -0.14 of its total potential returns per unit of risk. TOTAL CAPITAL INTERNATIONAL is currently generating about 0.12 per unit of volatility. If you would invest  6,598  in TOTAL CAPITAL INTERNATIONAL on December 29, 2024 and sell it today you would earn a total of  745.00  from holding TOTAL CAPITAL INTERNATIONAL or generate 11.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

HP Inc  vs.  TOTAL CAPITAL INTERNATIONAL

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 unsteady 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.

TOTAL CAPITAL INTERN

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TOTAL CAPITAL INTERNATIONAL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, TOTAL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HP and TOTAL

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

The idea behind HP Inc and TOTAL CAPITAL INTERNATIONAL 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.