Correlation Between Holitech Technology and Chahua Modern

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

Diversification Opportunities for Holitech Technology and Chahua Modern

0.69

Correlation Coefficient

Holitech Technology  Chahua Modern

Poor diversification

The 3 months correlation between Holitech and Chahua is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Holitech Technology Co and Chahua Modern Housewares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chahua Modern Housewares 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 Chahua Modern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chahua Modern Housewares has no effect on the direction of Holitech Technology i.e., Holitech Technology and Chahua Modern go up and down completely randomly.

Pair Corralation between Holitech Technology and Chahua Modern

Assuming the 90 days trading horizon Holitech Technology Co is expected to generate 0.92 times more return on investment than Chahua Modern. However, Holitech Technology Co is 1.09 times less risky than Chahua Modern. It trades about 0.15 of its potential returns per unit of risk. Chahua Modern Housewares is currently generating about 0.03 per unit of risk. If you would invest  150.00  in Holitech Technology Co on October 25, 2024 and sell it today you would earn a total of  55.00  from holding Holitech Technology Co or generate 36.67% 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.  Chahua Modern Housewares

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.

Chahua Modern Housewares

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chahua Modern Housewares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chahua Modern may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Holitech Technology and Chahua Modern

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

The idea behind Holitech Technology Co and Chahua Modern Housewares 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 Stocks Directory module to find actively traded stocks across global markets.