Correlation Between UTStarcom Holdings and Hewlett Packard

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

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

Diversification Opportunities for UTStarcom Holdings and Hewlett Packard

0.09

Correlation Coefficient

UTStarcom Holdings  Hewlett Packard

Significant diversification

The 3 months correlation between UTStarcom and Hewlett is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding UTStarcom Holdings Corp 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 UTStarcom Holdings 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 UTStarcom Holdings Corp 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 UTStarcom Holdings i.e., UTStarcom Holdings and Hewlett Packard go up and down completely randomly.

Pair Corralation between UTStarcom Holdings and Hewlett Packard

Given the investment horizon of 90 days UTStarcom Holdings Corp is expected to generate 1.9 times more return on investment than Hewlett Packard. However, UTStarcom Holdings is 1.9 times more volatile than Hewlett Packard Enterprise. It trades about 0.1 of its potential returns per unit of risk. Hewlett Packard Enterprise is currently generating about 0.13 per unit of risk. If you would invest  272.00  in UTStarcom Holdings Corp on September 4, 2024 and sell it today you would earn a total of  20.00  from holding UTStarcom Holdings Corp or generate 7.35% return on investment over 90 days.

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

UTStarcom Holdings Corp  vs.  Hewlett Packard Enterprise

UTStarcom Holdings Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UTStarcom Holdings Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, UTStarcom Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Hewlett Packard Ente

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Hewlett Packard exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UTStarcom Holdings and Hewlett Packard

The main advantage of trading using opposite UTStarcom Holdings and Hewlett Packard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UTStarcom Holdings 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 UTStarcom Holdings Corp 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .