Correlation Between HPQ Silicon and Apple

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

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

Diversification Opportunities for HPQ Silicon and Apple

-0.44

Correlation Coefficient

HPQ Silicon  Apple

Very good diversification

The 3 months correlation between HPQ and Apple is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding HPQ Silicon Resources and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR and HPQ Silicon 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 HPQ Silicon Resources are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of HPQ Silicon i.e., HPQ Silicon and Apple go up and down completely randomly.

Pair Corralation between HPQ Silicon and Apple

Assuming the 90 days horizon HPQ Silicon is expected to generate 2.85 times less return on investment than Apple. In addition to that, HPQ Silicon is 2.92 times more volatile than Apple Inc CDR. It trades about 0.01 of its total potential returns per unit of risk. Apple Inc CDR is currently generating about 0.11 per unit of volatility. If you would invest  1,866  in Apple Inc CDR on September 26, 2024 and sell it today you would earn a total of  1,915  from holding Apple Inc CDR or generate 102.63% return on investment over 90 days.

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

HPQ Silicon Resources  vs.  Apple Inc CDR

HPQ Silicon Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HPQ Silicon Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Apple Inc CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HPQ Silicon and Apple

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

The idea behind HPQ Silicon Resources and Apple Inc CDR 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.