Correlation Between HP and CLP Holdings
Can any of the company-specific risk be diversified away by investing in both HP and CLP Holdings 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 CLP Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and CLP Holdings, you can compare the effects of market volatilities on HP and CLP Holdings 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 CLP Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and CLP Holdings.
Diversification Opportunities for HP and CLP Holdings
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HP and CLP is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and CLP Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLP Holdings 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 CLP Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLP Holdings has no effect on the direction of HP i.e., HP and CLP Holdings go up and down completely randomly.
Pair Corralation between HP and CLP Holdings
Considering the 90-day investment horizon HP Inc is expected to generate 4.29 times more return on investment than CLP Holdings. However, HP is 4.29 times more volatile than CLP Holdings. It trades about 0.01 of its potential returns per unit of risk. CLP Holdings is currently generating about 0.0 per unit of risk. If you would invest 3,552 in HP Inc on September 1, 2024 and sell it today you would lose (9.00) from holding HP Inc or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. CLP Holdings
Performance |
| Timeline |
| HP Inc |
| CLP Holdings |
HP and CLP Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and CLP Holdings
The main advantage of trading using opposite HP and CLP Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, CLP Holdings 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 CLP Holdings will offset losses from the drop in CLP Holdings' long position.The idea behind HP Inc and CLP Holdings 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.| CLP Holdings vs. Southern Company | CLP Holdings vs. Duke Energy | CLP Holdings vs. Duke Energy | CLP Holdings vs. National Grid PLC |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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