Correlation Between Holitech Technology and China Fund

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

Diversification Opportunities for Holitech Technology and China Fund

-0.33

Correlation Coefficient

Holitech Technology  China Fund

Very good diversification

The 3 months correlation between Holitech and China is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Holitech Technology Co and China Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Fund Management 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 China Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Fund Management has no effect on the direction of Holitech Technology i.e., Holitech Technology and China Fund go up and down completely randomly.

Pair Corralation between Holitech Technology and China Fund

Assuming the 90 days trading horizon Holitech Technology Co is expected to under-perform the China Fund. In addition to that, Holitech Technology is 3.12 times more volatile than China Fund Management. It trades about -0.06 of its total potential returns per unit of risk. China Fund Management is currently generating about 0.16 per unit of volatility. If you would invest  981.00  in China Fund Management on December 1, 2024 and sell it today you would earn a total of  85.00  from holding China Fund Management or generate 8.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Holitech Technology Co  vs.  China Fund Management

Holitech Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Holitech Technology Co 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.

China Fund Management

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Fund Management are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Fund may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Holitech Technology and China Fund

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

The idea behind Holitech Technology Co and China Fund Management 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.