Correlation Between Holitech Technology and SUNSEA Telecommunicatio

Can any of the company-specific risk be diversified away by investing in both Holitech Technology and SUNSEA Telecommunicatio 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 SUNSEA Telecommunicatio 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 SUNSEA Telecommunications Co, you can compare the effects of market volatilities on Holitech Technology and SUNSEA Telecommunicatio 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 SUNSEA Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holitech Technology and SUNSEA Telecommunicatio.

Diversification Opportunities for Holitech Technology and SUNSEA Telecommunicatio

0.72

Correlation Coefficient

Holitech Technology  SUNSEA Telecommunicatio

Poor diversification

The 3 months correlation between Holitech and SUNSEA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Holitech Technology Co and SUNSEA Telecommunications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNSEA Telecommunicatio 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 SUNSEA Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNSEA Telecommunicatio has no effect on the direction of Holitech Technology i.e., Holitech Technology and SUNSEA Telecommunicatio go up and down completely randomly.

Pair Corralation between Holitech Technology and SUNSEA Telecommunicatio

Assuming the 90 days trading horizon Holitech Technology Co is expected to generate 0.9 times more return on investment than SUNSEA Telecommunicatio. However, Holitech Technology Co is 1.11 times less risky than SUNSEA Telecommunicatio. It trades about 0.26 of its potential returns per unit of risk. SUNSEA Telecommunications Co is currently generating about 0.2 per unit of risk. If you would invest  139.00  in Holitech Technology Co on September 4, 2024 and sell it today you would earn a total of  91.00  from holding Holitech Technology Co or generate 65.47% return on investment over 90 days.

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

Holitech Technology Co  vs.  SUNSEA Telecommunications Co

Holitech Technology

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Holitech Technology Co are ranked lower than 20 (%) 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.

SUNSEA Telecommunicatio

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SUNSEA Telecommunications Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SUNSEA Telecommunicatio sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Holitech Technology and SUNSEA Telecommunicatio

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

The idea behind Holitech Technology Co and SUNSEA Telecommunications Co 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.