Correlation Between HP and Jadeart
Can any of the company-specific risk be diversified away by investing in both HP and Jadeart 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 Jadeart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Jadeart Group, you can compare the effects of market volatilities on HP and Jadeart 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 Jadeart. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Jadeart.
Diversification Opportunities for HP and Jadeart
Excellent diversification
The 3 months correlation between HP and Jadeart is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Jadeart Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jadeart Group 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 Jadeart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jadeart Group has no effect on the direction of HP i.e., HP and Jadeart go up and down completely randomly.
Pair Corralation between HP and Jadeart
Considering the 90-day investment horizon HP Inc is expected to under-perform the Jadeart. But the stock apears to be less risky and, when comparing its historical volatility, HP Inc is 8.39 times less risky than Jadeart. The stock trades about -0.09 of its potential returns per unit of risk. The Jadeart Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 0.24 in Jadeart Group on August 30, 2024 and sell it today you would earn a total of 0.16 from holding Jadeart Group or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
HP Inc vs. Jadeart Group
Performance |
| Timeline |
| HP Inc |
| Jadeart Group |
HP and Jadeart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Jadeart
The main advantage of trading using opposite HP and Jadeart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Jadeart 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 Jadeart will offset losses from the drop in Jadeart's long position.The idea behind HP Inc and Jadeart Group 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.| Jadeart vs. China Sun Grp | Jadeart vs. Lotus Pharmaceuticals | Jadeart vs. China Medicine | Jadeart vs. China Clean Energy |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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