Correlation Between HP and Lixte Biotechnology
Can any of the company-specific risk be diversified away by investing in both HP and Lixte Biotechnology 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 Lixte Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Lixte Biotechnology Holdings, you can compare the effects of market volatilities on HP and Lixte Biotechnology 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 Lixte Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Lixte Biotechnology.
Diversification Opportunities for HP and Lixte Biotechnology
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HP and Lixte is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Lixte Biotechnology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixte Biotechnology 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 Lixte Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixte Biotechnology has no effect on the direction of HP i.e., HP and Lixte Biotechnology go up and down completely randomly.
Pair Corralation between HP and Lixte Biotechnology
Considering the 90-day investment horizon HP is expected to generate 52.3 times less return on investment than Lixte Biotechnology. But when comparing it to its historical volatility, HP Inc is 3.24 times less risky than Lixte Biotechnology. It trades about 0.01 of its potential returns per unit of risk. Lixte Biotechnology Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 222.00 in Lixte Biotechnology Holdings on November 3, 2024 and sell it today you would earn a total of 26.00 from holding Lixte Biotechnology Holdings or generate 11.71% 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. Lixte Biotechnology Holdings
Performance |
| Timeline |
| HP Inc |
| Lixte Biotechnology |
HP and Lixte Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Lixte Biotechnology
The main advantage of trading using opposite HP and Lixte Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Lixte Biotechnology 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 Lixte Biotechnology will offset losses from the drop in Lixte Biotechnology's long position.The idea behind HP Inc and Lixte Biotechnology 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.| Lixte Biotechnology vs. Allarity Therapeutics | Lixte Biotechnology vs. Virax Biolabs Group | Lixte Biotechnology vs. Quoin Pharmaceuticals Ltd | Lixte Biotechnology vs. Indaptus Therapeutics |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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