Correlation Between Guosheng Financial and Holitech Technology

Can any of the company-specific risk be diversified away by investing in both Guosheng Financial and Holitech Technology 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 Guosheng Financial and Holitech Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guosheng Financial Holding and Holitech Technology Co, you can compare the effects of market volatilities on Guosheng Financial and Holitech Technology 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 Guosheng Financial with a short position of Holitech Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guosheng Financial and Holitech Technology.

Diversification Opportunities for Guosheng Financial and Holitech Technology

0.57

Correlation Coefficient

Guosheng Financial  Holitech Technology

Very weak diversification

The 3 months correlation between Guosheng and Holitech is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Guosheng Financial Holding and Holitech Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holitech Technology and Guosheng Financial 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 Guosheng Financial Holding are associated (or correlated) with Holitech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holitech Technology has no effect on the direction of Guosheng Financial i.e., Guosheng Financial and Holitech Technology go up and down completely randomly.

Pair Corralation between Guosheng Financial and Holitech Technology

Assuming the 90 days trading horizon Guosheng Financial is expected to generate 1.26 times less return on investment than Holitech Technology. In addition to that, Guosheng Financial is 1.18 times more volatile than Holitech Technology Co. It trades about 0.17 of its total potential returns per unit of risk. Holitech Technology Co is currently generating about 0.25 per unit of volatility. If you would invest  146.00  in Holitech Technology Co on September 5, 2024 and sell it today you would earn a total of  88.00  from holding Holitech Technology Co or generate 60.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Guosheng Financial Holding  vs.  Holitech Technology Co

Guosheng Financial

Risk-Adjusted Performance

13 of 100

Good

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

Holitech Technology

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Holitech Technology Co are ranked lower than 19 (%) 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.

Pair Trading with Guosheng Financial and Holitech Technology

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

The idea behind Guosheng Financial Holding and Holitech Technology Co 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.