Correlation Between HP and COMCAST

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

By analyzing existing cross correlation between HP Inc and COMCAST P NEW, you can compare the effects of market volatilities on HP and COMCAST 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 COMCAST. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and COMCAST.

Diversification Opportunities for HP and COMCAST

-0.62

Correlation Coefficient

HP  COMCAST

Excellent diversification

The 3 months correlation between HP and COMCAST is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and COMCAST P NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMCAST P NEW 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 COMCAST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMCAST P NEW has no effect on the direction of HP i.e., HP and COMCAST go up and down completely randomly.

Pair Corralation between HP and COMCAST

Considering the 90-day investment horizon HP Inc is expected to generate 1.87 times more return on investment than COMCAST. However, HP is 1.87 times more volatile than COMCAST P NEW. It trades about 0.04 of its potential returns per unit of risk. COMCAST P NEW is currently generating about -0.13 per unit of risk. If you would invest  3,504  in HP Inc on September 4, 2024 and sell it today you would earn a total of  141.00  from holding HP Inc or generate 4.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	87.5%
Values	Daily Returns

HP Inc  vs.  COMCAST P NEW

HP Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HP Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, HP is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

COMCAST P NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMCAST P NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for COMCAST P NEW investors.

Pair Trading with HP and COMCAST

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

The idea behind HP Inc and COMCAST P NEW 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.