Correlation Between HP and Lightinthebox Holding

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

Diversification Opportunities for HP and Lightinthebox Holding

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between HP and Lightinthebox is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Lightinthebox Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lightinthebox Holding 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 Lightinthebox Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lightinthebox Holding has no effect on the direction of HP i.e., HP and Lightinthebox Holding go up and down completely randomly.

Pair Corralation between HP and Lightinthebox Holding

Considering the 90-day investment horizon HP Inc is expected to generate 0.9 times more return on investment than Lightinthebox Holding. However, HP Inc is 1.11 times less risky than Lightinthebox Holding. It trades about 0.26 of its potential returns per unit of risk. Lightinthebox Holding Co is currently generating about -0.17 per unit of risk. If you would invest  3,106  in HP Inc on May 14, 2022 and sell it today you would earn a total of  359.00  from holding HP Inc or generate 11.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

HP Inc  vs.  Lightinthebox Holding Co

 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

Lightinthebox Holding 
Lightinthebox Performance
0 of 100
Over the last 90 days Lightinthebox Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lightinthebox Price Channel

HP and Lightinthebox Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HP and Lightinthebox Holding

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

HP Inc

Pair trading matchups for HP

The idea behind HP Inc and Lightinthebox Holding Co 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.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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