Correlation Between HP and West Mining
Can any of the company-specific risk be diversified away by investing in both HP and West Mining 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 West Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and West Mining Corp, you can compare the effects of market volatilities on HP and West Mining 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 West Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and West Mining.
Diversification Opportunities for HP and West Mining
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HP and West is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and West Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Mining Corp 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 West Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Mining Corp has no effect on the direction of HP i.e., HP and West Mining go up and down completely randomly.
Pair Corralation between HP and West Mining
Considering the 90-day investment horizon HP Inc is expected to generate 0.39 times more return on investment than West Mining. However, HP Inc is 2.58 times less risky than West Mining. It trades about -0.01 of its potential returns per unit of risk. West Mining Corp is currently generating about -0.13 per unit of risk. If you would invest 3,599 in HP Inc on September 3, 2024 and sell it today you would lose (56.00) from holding HP Inc or give up 1.56% 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. West Mining Corp
Performance |
| Timeline |
| HP Inc |
| West Mining Corp |
HP and West Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and West Mining
The main advantage of trading using opposite HP and West Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, West Mining 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 West Mining will offset losses from the drop in West Mining's long position.The idea behind HP Inc and West Mining Corp 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.| West Mining vs. Atomic Minerals | West Mining vs. Mundoro Capital | West Mining vs. E79 Resources Corp | West Mining vs. Norra Metals Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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