Correlation Between Holitech Technology and Dalian Thermal

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

Diversification Opportunities for Holitech Technology and Dalian Thermal

0.22

Correlation Coefficient

Holitech Technology  Dalian Thermal

Modest diversification

The 3 months correlation between Holitech and Dalian is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Holitech Technology Co and Dalian Thermal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalian Thermal Power 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 Dalian Thermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalian Thermal Power has no effect on the direction of Holitech Technology i.e., Holitech Technology and Dalian Thermal go up and down completely randomly.

Pair Corralation between Holitech Technology and Dalian Thermal

Assuming the 90 days trading horizon Holitech Technology Co is expected to under-perform the Dalian Thermal. But the stock apears to be less risky and, when comparing its historical volatility, Holitech Technology Co is 1.05 times less risky than Dalian Thermal. The stock trades about 0.0 of its potential returns per unit of risk. The Dalian Thermal Power is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  551.00  in Dalian Thermal Power on October 25, 2024 and sell it today you would earn a total of  64.00  from holding Dalian Thermal Power or generate 11.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Holitech Technology Co  vs.  Dalian Thermal Power

Holitech Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Holitech Technology Co are ranked lower than 12 (%) 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.

Dalian Thermal Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dalian Thermal Power 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 Dalian Thermal

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

The idea behind Holitech Technology Co and Dalian Thermal Power 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.