Correlation Between Wetouch Technology and HP

Can any of the company-specific risk be diversified away by investing in both Wetouch Technology 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 Wetouch Technology and HP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wetouch Technology Common and HP Inc, you can compare the effects of market volatilities on Wetouch Technology 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 Wetouch Technology with a short position of HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wetouch Technology and HP.

Diversification Opportunities for Wetouch Technology and HP

-0.11

Correlation Coefficient

Wetouch Technology  HP

Good diversification

The 3 months correlation between Wetouch and HP is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Wetouch Technology Common and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc and Wetouch Technology 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 Wetouch Technology Common 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 Wetouch Technology i.e., Wetouch Technology and HP go up and down completely randomly.

Pair Corralation between Wetouch Technology and HP

Given the investment horizon of 90 days Wetouch Technology Common is expected to generate 7.8 times more return on investment than HP. However, Wetouch Technology is 7.8 times more volatile than HP Inc. It trades about 0.04 of its potential returns per unit of risk. HP Inc is currently generating about -0.02 per unit of risk. If you would invest  1,400  in Wetouch Technology Common on January 29, 2024 and sell it today you would lose (1,200) from holding Wetouch Technology Common or give up 85.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Wetouch Technology Common  vs.  HP Inc

Wetouch Technology Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wetouch Technology Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

HP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, HP is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Wetouch Technology and HP

The main advantage of trading using opposite Wetouch Technology and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wetouch Technology 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.

The idea behind Wetouch Technology Common 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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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 the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.