Correlation Between HP and Acumen Pharmaceuticals

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

Diversification Opportunities for HP and Acumen Pharmaceuticals

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between HP and Acumen is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Acumen Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acumen Pharmaceuticals 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 Acumen Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acumen Pharmaceuticals has no effect on the direction of HP i.e., HP and Acumen Pharmaceuticals go up and down completely randomly.

Pair Corralation between HP and Acumen Pharmaceuticals

Considering the 90-day investment horizon HP Inc is expected to generate 0.29 times more return on investment than Acumen Pharmaceuticals. However, HP Inc is 3.5 times less risky than Acumen Pharmaceuticals. It trades about 0.19 of its potential returns per unit of risk. Acumen Pharmaceuticals is currently generating about 0.02 per unit of risk. If you would invest  2,857  in HP Inc on December 29, 2023 and sell it today you would earn a total of  165.00  from holding HP Inc or generate 5.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

HP Inc  vs.  Acumen Pharmaceuticals

 Performance 
       Timeline  
HP Inc 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in HP Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.
Acumen Pharmaceuticals 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Acumen Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Acumen Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

HP and Acumen Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HP and Acumen Pharmaceuticals

The main advantage of trading using opposite HP and Acumen Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Acumen Pharmaceuticals 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 Acumen Pharmaceuticals will offset losses from the drop in Acumen Pharmaceuticals' long position.
The idea behind HP Inc and Acumen Pharmaceuticals 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 the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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