Correlation Between Holitech Technology and Zhengzhou Coal

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

Diversification Opportunities for Holitech Technology and Zhengzhou Coal

0.41

Correlation Coefficient

Holitech Technology  Zhengzhou Coal

Very weak diversification

The 3 months correlation between Holitech and Zhengzhou is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Holitech Technology Co and Zhengzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengzhou Coal Mining 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 Zhengzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengzhou Coal Mining has no effect on the direction of Holitech Technology i.e., Holitech Technology and Zhengzhou Coal go up and down completely randomly.

Pair Corralation between Holitech Technology and Zhengzhou Coal

Assuming the 90 days trading horizon Holitech Technology Co is expected to under-perform the Zhengzhou Coal. In addition to that, Holitech Technology is 2.3 times more volatile than Zhengzhou Coal Mining. It trades about -0.21 of its total potential returns per unit of risk. Zhengzhou Coal Mining is currently generating about -0.07 per unit of volatility. If you would invest  1,324  in Zhengzhou Coal Mining on September 16, 2024 and sell it today you would lose (31.00) from holding Zhengzhou Coal Mining or give up 2.34% of portfolio value over 90 days.

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

Holitech Technology Co  vs.  Zhengzhou Coal Mining

Holitech Technology

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Holitech Technology Co are ranked lower than 21 (%) 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.

Zhengzhou Coal Mining

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zhengzhou Coal Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhengzhou Coal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Holitech Technology and Zhengzhou Coal

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

The idea behind Holitech Technology Co and Zhengzhou Coal Mining 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.