Correlation Between HP and MOL PLC
Can any of the company-specific risk be diversified away by investing in both HP and MOL PLC 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 MOL PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and MOL PLC ADR, you can compare the effects of market volatilities on HP and MOL PLC 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 MOL PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and MOL PLC.
Diversification Opportunities for HP and MOL PLC
Excellent diversification
The 3 months correlation between HP and MOL is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and MOL PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOL PLC ADR 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 MOL PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOL PLC ADR has no effect on the direction of HP i.e., HP and MOL PLC go up and down completely randomly.
Pair Corralation between HP and MOL PLC
Considering the 90-day investment horizon HP Inc is expected to under-perform the MOL PLC. In addition to that, HP is 1.81 times more volatile than MOL PLC ADR. It trades about -0.07 of its total potential returns per unit of risk. MOL PLC ADR is currently generating about -0.01 per unit of volatility. If you would invest 345.00 in MOL PLC ADR on August 31, 2024 and sell it today you would lose (2.00) from holding MOL PLC ADR or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. MOL PLC ADR
Performance |
| Timeline |
| HP Inc |
| MOL PLC ADR |
HP and MOL PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and MOL PLC
The main advantage of trading using opposite HP and MOL PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, MOL PLC 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 MOL PLC will offset losses from the drop in MOL PLC's long position.| HP vs. RLJ Lodging Trust | HP vs. Aquagold International | HP vs. Stepstone Group | HP vs. Morningstar Unconstrained Allocation |
| MOL PLC vs. Equinor ASA ADR | MOL PLC vs. TotalEnergies SE ADR | MOL PLC vs. Ecopetrol SA ADR | MOL PLC vs. National Fuel Gas |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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