Correlation Between KVH Industries and Hewlett Packard

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

By analyzing existing cross correlation between KVH Industries and Hewlett Packard Enterprise, you can compare the effects of market volatilities on KVH Industries and Hewlett Packard 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 KVH Industries with a short position of Hewlett Packard. Check out your portfolio center. Please also check ongoing floating volatility patterns of KVH Industries and Hewlett Packard.

Diversification Opportunities for KVH Industries and Hewlett Packard

0.18

Correlation Coefficient

KVH Industries  Hewlett Packard

Average diversification

The 3 months correlation between KVH and Hewlett is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and Hewlett Packard Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hewlett Packard Ente and KVH Industries 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 KVH Industries are associated (or correlated) with Hewlett Packard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hewlett Packard Ente has no effect on the direction of KVH Industries i.e., KVH Industries and Hewlett Packard go up and down completely randomly.

Pair Corralation between KVH Industries and Hewlett Packard

Given the investment horizon of 90 days KVH Industries is expected to generate 0.67 times more return on investment than Hewlett Packard. However, KVH Industries is 1.5 times less risky than Hewlett Packard. It trades about 0.02 of its potential returns per unit of risk. Hewlett Packard Enterprise is currently generating about -0.03 per unit of risk. If you would invest  575.00  in KVH Industries on December 1, 2024 and sell it today you would earn a total of  8.00  from holding KVH Industries or generate 1.39% return on investment over 90 days.

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

KVH Industries  vs.  Hewlett Packard Enterprise

KVH Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, KVH Industries is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Hewlett Packard Ente

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hewlett Packard Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Hewlett Packard is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with KVH Industries and Hewlett Packard

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

The idea behind KVH Industries and Hewlett Packard Enterprise 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.