Correlation Between KE Holdings and Hp

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

Diversification Opportunities for KE Holdings and Hp

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between KE Holdings and Hp is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding KE Holdings Inc and Hp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hp Inc and KE Holdings 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 KE Holdings 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 KE Holdings i.e., KE Holdings and Hp go up and down completely randomly.

Pair Corralation between KE Holdings and Hp

Given the investment horizon of 90 days KE Holdings is expected to generate 2.23 times more return on investment than Hp. However, KE Holdings is 2.23 times more volatile than Hp Inc. It trades about 0.33 of its potential returns per unit of risk. Hp Inc is currently generating about 0.11 per unit of risk. If you would invest  1,018  in KE Holdings on August 31, 2022 and sell it today you would earn a total of  451.00  from holding KE Holdings or generate 44.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

KE Holdings Inc  vs.  Hp Inc

 Performance (%) 
       Timeline  
KE Holdings 
KE Holdings Performance
0 of 100
Over the last 90 days KE Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

KE Holdings Price Channel

Hp Inc 
Hp Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hp Inc are ranked lower than 2 (%) 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

KE Holdings and Hp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KE Holdings and Hp

The main advantage of trading using opposite KE Holdings and Hp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KE Holdings 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.
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The idea behind KE Holdings 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.
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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