Correlation Between Hp and Build-A-Bear Workshop

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

Diversification Opportunities for Hp and Build-A-Bear Workshop

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Hp and Build-A-Bear is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hp Inc and Build-A-Bear Workshop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Build-A-Bear Workshop 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 Build-A-Bear Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Build-A-Bear Workshop has no effect on the direction of Hp i.e., Hp and Build-A-Bear Workshop go up and down completely randomly.

Pair Corralation between Hp and Build-A-Bear Workshop

Considering the 90-day investment horizon Hp is expected to generate 4.93 times less return on investment than Build-A-Bear Workshop. But when comparing it to its historical volatility, Hp Inc is 2.27 times less risky than Build-A-Bear Workshop. It trades about 0.04 of its potential returns per unit of risk. Build-A-Bear Workshop is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  432.00  in Build-A-Bear Workshop on August 29, 2022 and sell it today you would earn a total of  1,451  from holding Build-A-Bear Workshop or generate 335.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Hp Inc  vs.  Build-A-Bear Workshop

 Performance (%) 
       Timeline  
Hp Inc 
Hp Performance
0 of 100
Over the last 90 days Hp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. 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

Build-A-Bear Workshop 
Build-A-Bear Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Build-A-Bear Workshop are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Build-A-Bear Workshop showed solid returns over the last few months and may actually be approaching a breakup point.

Build-A-Bear Price Channel

Hp and Build-A-Bear Workshop Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hp and Build-A-Bear Workshop

The main advantage of trading using opposite Hp and Build-A-Bear Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hp position performs unexpectedly, Build-A-Bear Workshop 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 Build-A-Bear Workshop will offset losses from the drop in Build-A-Bear Workshop's long position.
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The idea behind Hp Inc and Build-A-Bear Workshop 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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