Correlation Between HP and Nano Dimension
Can any of the company-specific risk be diversified away by investing in both HP and Nano Dimension 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 Nano Dimension into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Nano Dimension, you can compare the effects of market volatilities on HP and Nano Dimension 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 Nano Dimension. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Nano Dimension.
Diversification Opportunities for HP and Nano Dimension
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HP and Nano is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Nano Dimension in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Dimension 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 Nano Dimension. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano Dimension has no effect on the direction of HP i.e., HP and Nano Dimension go up and down completely randomly.
Pair Corralation between HP and Nano Dimension
Considering the 90-day investment horizon HP Inc is expected to generate 0.74 times more return on investment than Nano Dimension. However, HP Inc is 1.36 times less risky than Nano Dimension. It trades about 0.17 of its potential returns per unit of risk. Nano Dimension is currently generating about -0.12 per unit of risk. If you would invest 3,585 in HP Inc on August 24, 2024 and sell it today you would earn a total of 206.00 from holding HP Inc or generate 5.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Nano Dimension
Performance |
| Timeline |
| HP Inc |
| Nano Dimension |
HP and Nano Dimension Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Nano Dimension
The main advantage of trading using opposite HP and Nano Dimension positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Nano Dimension 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 Nano Dimension will offset losses from the drop in Nano Dimension's long position.The idea behind HP Inc and Nano Dimension 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.| Nano Dimension vs. Desktop Metal | Nano Dimension vs. 3D Systems | Nano Dimension vs. Markforged Holding Corp | Nano Dimension vs. Stratasys |
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 CEOs Directory module to screen CEOs from public companies around the world.
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