Correlation Between Holy Stone and Ichia Technologies

Can any of the company-specific risk be diversified away by investing in both Holy Stone and Ichia Technologies 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 Holy Stone and Ichia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Holy Stone Enterprise and Ichia Technologies, you can compare the effects of market volatilities on Holy Stone and Ichia Technologies 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 Holy Stone with a short position of Ichia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holy Stone and Ichia Technologies.

Diversification Opportunities for Holy Stone and Ichia Technologies

0.84

Correlation Coefficient

Holy Stone  Ichia Technologies

Very poor diversification

The 3 months correlation between Holy and Ichia is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Holy Stone Enterprise and Ichia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichia Technologies and Holy Stone 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 Holy Stone Enterprise are associated (or correlated) with Ichia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichia Technologies has no effect on the direction of Holy Stone i.e., Holy Stone and Ichia Technologies go up and down completely randomly.

Pair Corralation between Holy Stone and Ichia Technologies

Assuming the 90 days trading horizon Holy Stone Enterprise is expected to generate 0.44 times more return on investment than Ichia Technologies. However, Holy Stone Enterprise is 2.3 times less risky than Ichia Technologies. It trades about -0.08 of its potential returns per unit of risk. Ichia Technologies is currently generating about -0.14 per unit of risk. If you would invest  9,030  in Holy Stone Enterprise on October 24, 2024 and sell it today you would lose (320.00) from holding Holy Stone Enterprise or give up 3.54% of portfolio value over 90 days.

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

Holy Stone Enterprise  vs.  Ichia Technologies

Holy Stone Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holy Stone Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Holy Stone is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ichia Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ichia Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Holy Stone and Ichia Technologies

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

The idea behind Holy Stone Enterprise and Ichia Technologies 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.