I would say the best coding challenges are where you ask them to work on a very small project that tests the skills you need. You should allow libraries and allow research. Give them a whole week to spend their time on it.
Hackerrank style tests only test their ability to competitive program. And while that is a skill, it's not one often needed in software engineering.
I would be interested in how readable they've made a solution, how they use comments, how they test something etc rather than how quickly they can encode a string to another string.
Although because of this I may not be able to get any Placements in my college :(
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