Correlation Between Holitech Technology and Heilongjiang Transport

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

Diversification Opportunities for Holitech Technology and Heilongjiang Transport

0.75

Correlation Coefficient

Holitech Technology  Heilongjiang Transport

Poor diversification

The 3 months correlation between Holitech and Heilongjiang is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Holitech Technology Co and Heilongjiang Transport Develop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heilongjiang Transport 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 Heilongjiang Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heilongjiang Transport has no effect on the direction of Holitech Technology i.e., Holitech Technology and Heilongjiang Transport go up and down completely randomly.

Pair Corralation between Holitech Technology and Heilongjiang Transport

Assuming the 90 days trading horizon Holitech Technology Co is expected to generate 1.27 times more return on investment than Heilongjiang Transport. However, Holitech Technology is 1.27 times more volatile than Heilongjiang Transport Development. It trades about 0.31 of its potential returns per unit of risk. Heilongjiang Transport Development is currently generating about 0.17 per unit of risk. If you would invest  129.00  in Holitech Technology Co on September 12, 2024 and sell it today you would earn a total of  99.00  from holding Holitech Technology Co or generate 76.74% 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.  Heilongjiang Transport Develop

Holitech Technology

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Holitech Technology Co are ranked lower than 24 (%) 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.

Heilongjiang Transport

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heilongjiang Transport Development are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heilongjiang Transport sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Holitech Technology and Heilongjiang Transport

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

The idea behind Holitech Technology Co and Heilongjiang Transport Development 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.