Correlation Between Hewlett Packard and Canadian Solar

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

By analyzing existing cross correlation between Hewlett Packard Enterprise and Canadian Solar, you can compare the effects of market volatilities on Hewlett Packard and Canadian Solar 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 Hewlett Packard with a short position of Canadian Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hewlett Packard and Canadian Solar.

Diversification Opportunities for Hewlett Packard and Canadian Solar

-0.5

Correlation Coefficient

Hewlett Packard  Canadian Solar

Very good diversification

The 3 months correlation between Hewlett and Canadian is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Enterprise and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar and Hewlett Packard 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 Hewlett Packard Enterprise are associated (or correlated) with Canadian Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Solar has no effect on the direction of Hewlett Packard i.e., Hewlett Packard and Canadian Solar go up and down completely randomly.

Pair Corralation between Hewlett Packard and Canadian Solar

Considering the 90-day investment horizon Hewlett Packard Enterprise is expected to generate 0.44 times more return on investment than Canadian Solar. However, Hewlett Packard Enterprise is 2.29 times less risky than Canadian Solar. It trades about 0.08 of its potential returns per unit of risk. Canadian Solar is currently generating about -0.05 per unit of risk. If you would invest  1,883  in Hewlett Packard Enterprise on September 21, 2024 and sell it today you would earn a total of  206.00  from holding Hewlett Packard Enterprise or generate 10.94% return on investment over 90 days.

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

Hewlett Packard Enterprise  vs.  Canadian Solar

Hewlett Packard Ente

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Hewlett Packard may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Canadian Solar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Solar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Hewlett Packard and Canadian Solar

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

The idea behind Hewlett Packard Enterprise and Canadian Solar 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.