Correlation Between HP and Bouygues
Can any of the company-specific risk be diversified away by investing in both HP and Bouygues 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 Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Bouygues SA, you can compare the effects of market volatilities on HP and Bouygues 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 Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Bouygues.
Diversification Opportunities for HP and Bouygues
Very good diversification
The 3 months correlation between HP and Bouygues is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA 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 Bouygues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouygues SA has no effect on the direction of HP i.e., HP and Bouygues go up and down completely randomly.
Pair Corralation between HP and Bouygues
Considering the 90-day investment horizon HP Inc is expected to generate 1.03 times more return on investment than Bouygues. However, HP is 1.03 times more volatile than Bouygues SA. It trades about 0.05 of its potential returns per unit of risk. Bouygues SA is currently generating about -0.05 per unit of risk. If you would invest 2,843 in HP Inc on September 2, 2024 and sell it today you would earn a total of 700.00 from holding HP Inc or generate 24.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.58% |
| Values | Daily Returns |
HP Inc vs. Bouygues SA
Performance |
| Timeline |
| HP Inc |
| Bouygues SA |
HP and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Bouygues
The main advantage of trading using opposite HP and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Bouygues 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 Bouygues will offset losses from the drop in Bouygues' long position.The idea behind HP Inc and Bouygues SA 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.| Bouygues vs. Orion Group Holdings | Bouygues vs. Agrify Corp | Bouygues vs. Matrix Service Co | Bouygues vs. MYR Group |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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