Correlation Between Nano Dimension and HP

Can any of the company-specific risk be diversified away by investing in both Nano Dimension and HP 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 Nano Dimension and HP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nano Dimension and HP Inc, you can compare the effects of market volatilities on Nano Dimension and HP 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 Nano Dimension with a short position of HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nano Dimension and HP.

Diversification Opportunities for Nano Dimension and HP

-0.16

Correlation Coefficient

Nano Dimension  HP

Good diversification

The 3 months correlation between Nano and HP is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nano Dimension and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc and Nano Dimension 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 Nano Dimension are associated (or correlated) with HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Nano Dimension i.e., Nano Dimension and HP go up and down completely randomly.

Pair Corralation between Nano Dimension and HP

Assuming the 90 days trading horizon Nano Dimension is expected to generate 1.61 times more return on investment than HP. However, Nano Dimension is 1.61 times more volatile than HP Inc. It trades about 0.15 of its potential returns per unit of risk. HP Inc is currently generating about -0.18 per unit of risk. If you would invest  202.00  in Nano Dimension on September 23, 2024 and sell it today you would earn a total of  30.00  from holding Nano Dimension or generate 14.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nano Dimension  vs.  HP Inc

Nano Dimension

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Dimension are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nano Dimension reported solid returns over the last few months and may actually be approaching a breakup point.

HP Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HP Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, HP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nano Dimension and HP

The main advantage of trading using opposite Nano Dimension and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nano Dimension position performs unexpectedly, HP 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 HP will offset losses from the drop in HP's long position.

The idea behind Nano Dimension and HP Inc 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.