Correlation Between HP and Conquest Resources
Can any of the company-specific risk be diversified away by investing in both HP and Conquest Resources 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 Conquest Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Conquest Resources Limited, you can compare the effects of market volatilities on HP and Conquest Resources 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 Conquest Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Conquest Resources.
Diversification Opportunities for HP and Conquest Resources
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HP and Conquest is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Conquest Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conquest Resources 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 Conquest Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conquest Resources has no effect on the direction of HP i.e., HP and Conquest Resources go up and down completely randomly.
Pair Corralation between HP and Conquest Resources
Considering the 90-day investment horizon HP is expected to generate 4.48 times less return on investment than Conquest Resources. But when comparing it to its historical volatility, HP Inc is 4.71 times less risky than Conquest Resources. It trades about 0.05 of its potential returns per unit of risk. Conquest Resources Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1.39 in Conquest Resources Limited on August 26, 2024 and sell it today you would earn a total of 0.36 from holding Conquest Resources Limited or generate 25.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Conquest Resources Limited
Performance |
| Timeline |
| HP Inc |
| Conquest Resources |
HP and Conquest Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Conquest Resources
The main advantage of trading using opposite HP and Conquest Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Conquest Resources 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 Conquest Resources will offset losses from the drop in Conquest Resources' long position.The idea behind HP Inc and Conquest Resources Limited 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.| Conquest Resources vs. Ascendant Resources | Conquest Resources vs. Cantex Mine Development | Conquest Resources vs. Amarc Resources | Conquest Resources vs. Sterling Metals Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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