Correlation Between HP and LiveOne

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Can any of the company-specific risk be diversified away by investing in both HP and LiveOne 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 LiveOne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and LiveOne, you can compare the effects of market volatilities on HP and LiveOne 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 LiveOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and LiveOne.

Diversification Opportunities for HP and LiveOne

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between HP and LiveOne is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and LiveOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveOne 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 LiveOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveOne has no effect on the direction of HP i.e., HP and LiveOne go up and down completely randomly.

Pair Corralation between HP and LiveOne

Considering the 90-day investment horizon HP Inc is expected to generate 0.66 times more return on investment than LiveOne. However, HP Inc is 1.52 times less risky than LiveOne. It trades about 0.06 of its potential returns per unit of risk. LiveOne is currently generating about -0.18 per unit of risk. If you would invest  2,780  in HP Inc on September 10, 2022 and sell it today you would earn a total of  68.00  from holding HP Inc or generate 2.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

HP Inc  vs.  LiveOne

 Performance (%) 
       Timeline  
HP Inc 
HP Performance
1 of 100
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. In spite of very healthy basic indicators, HP is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the insiders.

HP Price Channel

LiveOne 
LiveOne Performance
0 of 100
Over the last 90 days LiveOne has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

LiveOne Price Channel

HP and LiveOne Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HP and LiveOne

The main advantage of trading using opposite HP and LiveOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, LiveOne 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 LiveOne will offset losses from the drop in LiveOne's long position.
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The idea behind HP Inc and LiveOne 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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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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