Correlation Between Yes Optoelectronics and Holitech Technology

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

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

Diversification Opportunities for Yes Optoelectronics and Holitech Technology

0.05

Correlation Coefficient

Yes Optoelectronics  Holitech Technology

Significant diversification

The 3 months correlation between Yes and Holitech is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Yes Optoelectronics Co and Holitech Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holitech Technology and Yes Optoelectronics 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 Yes Optoelectronics Co 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 Yes Optoelectronics i.e., Yes Optoelectronics and Holitech Technology go up and down completely randomly.

Pair Corralation between Yes Optoelectronics and Holitech Technology

Assuming the 90 days trading horizon Yes Optoelectronics Co is expected to under-perform the Holitech Technology. In addition to that, Yes Optoelectronics is 1.13 times more volatile than Holitech Technology Co. It trades about -0.04 of its total potential returns per unit of risk. Holitech Technology Co is currently generating about 0.2 per unit of volatility. If you would invest  136.00  in Holitech Technology Co on October 23, 2024 and sell it today you would earn a total of  72.00  from holding Holitech Technology Co or generate 52.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Yes Optoelectronics Co  vs.  Holitech Technology Co

Yes Optoelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yes Optoelectronics Co 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.

Holitech Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Holitech Technology Co are ranked lower than 15 (%) 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 Yes Optoelectronics and Holitech Technology

The main advantage of trading using opposite Yes Optoelectronics and Holitech Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yes Optoelectronics 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 Yes Optoelectronics Co 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.