Correlation Between HP and Mink Therapeutics
Can any of the company-specific risk be diversified away by investing in both HP and Mink Therapeutics 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 Mink Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Mink Therapeutics, you can compare the effects of market volatilities on HP and Mink Therapeutics 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 Mink Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Mink Therapeutics.
Diversification Opportunities for HP and Mink Therapeutics
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HP and Mink is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Mink Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mink Therapeutics 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 Mink Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mink Therapeutics has no effect on the direction of HP i.e., HP and Mink Therapeutics go up and down completely randomly.
Pair Corralation between HP and Mink Therapeutics
Considering the 90-day investment horizon HP is expected to generate 4.86 times less return on investment than Mink Therapeutics. In addition to that, HP is 1.17 times more volatile than Mink Therapeutics. It trades about 0.01 of its total potential returns per unit of risk. Mink Therapeutics is currently generating about 0.06 per unit of volatility. If you would invest 71.00 in Mink Therapeutics on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Mink Therapeutics or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Mink Therapeutics
Performance |
| Timeline |
| HP Inc |
| Mink Therapeutics |
HP and Mink Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Mink Therapeutics
The main advantage of trading using opposite HP and Mink Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Mink Therapeutics 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 Mink Therapeutics will offset losses from the drop in Mink Therapeutics' long position.The idea behind HP Inc and Mink Therapeutics 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.| Mink Therapeutics vs. Affimed NV | Mink Therapeutics vs. Adaptimmune Therapeutics Plc | Mink Therapeutics vs. Sangamo Therapeutics | Mink Therapeutics vs. Day One Biopharmaceuticals |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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