Correlation Between Holitech Technology and Jizhong Energy

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

By analyzing existing cross correlation between Holitech Technology Co and Jizhong Energy Resources, you can compare the effects of market volatilities on Holitech Technology and Jizhong Energy 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 Holitech Technology with a short position of Jizhong Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holitech Technology and Jizhong Energy.

Diversification Opportunities for Holitech Technology and Jizhong Energy

0.32

Correlation Coefficient

Holitech Technology  Jizhong Energy

Weak diversification

The 3 months correlation between Holitech and Jizhong is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Holitech Technology Co and Jizhong Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jizhong Energy Resources and Holitech 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 Holitech Technology Co are associated (or correlated) with Jizhong Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jizhong Energy Resources has no effect on the direction of Holitech Technology i.e., Holitech Technology and Jizhong Energy go up and down completely randomly.

Pair Corralation between Holitech Technology and Jizhong Energy

Assuming the 90 days trading horizon Holitech Technology Co is expected to generate 2.3 times more return on investment than Jizhong Energy. However, Holitech Technology is 2.3 times more volatile than Jizhong Energy Resources. It trades about 0.21 of its potential returns per unit of risk. Jizhong Energy Resources is currently generating about -0.01 per unit of risk. If you would invest  134.00  in Holitech Technology Co on October 22, 2024 and sell it today you would earn a total of  76.00  from holding Holitech Technology Co or generate 56.72% return on investment over 90 days.

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

Holitech Technology Co  vs.  Jizhong Energy Resources

Holitech Technology

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Holitech Technology Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Holitech Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Jizhong Energy Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jizhong Energy Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jizhong Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Holitech Technology and Jizhong Energy

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

The idea behind Holitech Technology Co and Jizhong Energy Resources 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.