Correlation Between HP and ANSYS

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

Diversification Opportunities for HP and ANSYS

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between HP and ANSYS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and ANSYS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANSYS Inc 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 ANSYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANSYS Inc has no effect on the direction of HP i.e., HP and ANSYS go up and down completely randomly.

Pair Corralation between HP and ANSYS

Considering the 90-day investment horizon HP is expected to generate 1.77 times less return on investment than ANSYS. But when comparing it to its historical volatility, HP Inc is 1.12 times less risky than ANSYS. It trades about 0.2 of its potential returns per unit of risk. ANSYS Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  21,206  in ANSYS Inc on September 4, 2022 and sell it today you would earn a total of  4,468  from holding ANSYS Inc or generate 21.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

HP Inc  vs.  ANSYS Inc

 Performance (%) 
       Timeline  
HP Inc 
HP Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in HP Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, HP may actually be approaching a critical reversion point that can send shares even higher in January 2023.

HP Price Channel

ANSYS Inc 
ANSYS Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in ANSYS Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, ANSYS may actually be approaching a critical reversion point that can send shares even higher in January 2023.

ANSYS Price Channel

HP and ANSYS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HP and ANSYS

The main advantage of trading using opposite HP and ANSYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, ANSYS 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 ANSYS will offset losses from the drop in ANSYS's long position.
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The idea behind HP Inc and ANSYS 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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