Correlation Between Holitech Technology and Guangdong Jinma

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

Diversification Opportunities for Holitech Technology and Guangdong Jinma

0.64

Correlation Coefficient

Holitech Technology  Guangdong Jinma

Poor diversification

The 3 months correlation between Holitech and Guangdong is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Holitech Technology Co and Guangdong Jinma Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Jinma Ente 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 Guangdong Jinma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Jinma Ente has no effect on the direction of Holitech Technology i.e., Holitech Technology and Guangdong Jinma go up and down completely randomly.

Pair Corralation between Holitech Technology and Guangdong Jinma

Assuming the 90 days trading horizon Holitech Technology Co is expected to generate 1.25 times more return on investment than Guangdong Jinma. However, Holitech Technology is 1.25 times more volatile than Guangdong Jinma Entertainment. It trades about -0.09 of its potential returns per unit of risk. Guangdong Jinma Entertainment is currently generating about -0.35 per unit of risk. If you would invest  232.00  in Holitech Technology Co on October 8, 2024 and sell it today you would lose (16.00) from holding Holitech Technology Co or give up 6.9% of portfolio value over 90 days.

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

Holitech Technology Co  vs.  Guangdong Jinma Entertainment

Holitech Technology

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Holitech Technology Co are ranked lower than 17 (%) 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.

Guangdong Jinma Ente

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangdong Jinma Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Holitech Technology and Guangdong Jinma

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

The idea behind Holitech Technology Co and Guangdong Jinma Entertainment 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.