Correlation Between Hewlett Packard and PAR Technology

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

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

Diversification Opportunities for Hewlett Packard and PAR Technology

-0.61

Correlation Coefficient

Hewlett Packard  PAR Technology

Excellent diversification

The 3 months correlation between Hewlett and PAR is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Enterprise and PAR Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAR Technology and Hewlett Packard 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 Hewlett Packard Enterprise are associated (or correlated) with PAR Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAR Technology has no effect on the direction of Hewlett Packard i.e., Hewlett Packard and PAR Technology go up and down completely randomly.

Pair Corralation between Hewlett Packard and PAR Technology

Considering the 90-day investment horizon Hewlett Packard Enterprise is expected to under-perform the PAR Technology. But the stock apears to be less risky and, when comparing its historical volatility, Hewlett Packard Enterprise is 1.78 times less risky than PAR Technology. The stock trades about -0.25 of its potential returns per unit of risk. The PAR Technology is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  4,360  in PAR Technology on February 2, 2024 and sell it today you would lose (140.00) from holding PAR Technology or give up 3.21% of portfolio value over 90 days.

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

Hewlett Packard Enterprise  vs.  PAR Technology

Hewlett Packard Ente

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Hewlett Packard may actually be approaching a critical reversion point that can send shares even higher in June 2024.

PAR Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PAR Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Hewlett Packard and PAR Technology

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

The idea behind Hewlett Packard Enterprise and PAR Technology 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.