Correlation Between Mühlbauer Holding and HP

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

By analyzing existing cross correlation between Mhlbauer Holding AG and HP Inc, you can compare the effects of market volatilities on Mühlbauer Holding and HP 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 Mühlbauer Holding with a short position of HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mühlbauer Holding and HP.

Diversification Opportunities for Mühlbauer Holding and HP

-0.36

Correlation Coefficient

Mühlbauer Holding  HP

Very good diversification

The 3 months correlation between Mühlbauer and HP is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mhlbauer Holding AG and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc and Mühlbauer Holding 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 Mhlbauer Holding AG are associated (or correlated) with HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Mühlbauer Holding i.e., Mühlbauer Holding and HP go up and down completely randomly.

Pair Corralation between Mühlbauer Holding and HP

Assuming the 90 days trading horizon Mhlbauer Holding AG is expected to generate 0.78 times more return on investment than HP. However, Mhlbauer Holding AG is 1.28 times less risky than HP. It trades about 0.1 of its potential returns per unit of risk. HP Inc is currently generating about -0.14 per unit of risk. If you would invest  3,920  in Mhlbauer Holding AG on December 30, 2024 and sell it today you would earn a total of  340.00  from holding Mhlbauer Holding AG or generate 8.67% return on investment over 90 days.

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

Mhlbauer Holding AG  vs.  HP Inc

Mühlbauer Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mhlbauer Holding AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental drivers, Mühlbauer Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Mühlbauer Holding and HP

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

The idea behind Mhlbauer Holding AG and HP Inc 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.