Correlation Between Holy Stone and Pan Jit

Can any of the company-specific risk be diversified away by investing in both Holy Stone and Pan Jit 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 Pan Jit 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 Pan Jit International, you can compare the effects of market volatilities on Holy Stone and Pan Jit 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 Pan Jit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holy Stone and Pan Jit.

Diversification Opportunities for Holy Stone and Pan Jit

0.35

Correlation Coefficient

Holy Stone  Pan Jit

Weak diversification

The 3 months correlation between Holy and Pan is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Holy Stone Enterprise and Pan Jit International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Jit International 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 Pan Jit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Jit International has no effect on the direction of Holy Stone i.e., Holy Stone and Pan Jit go up and down completely randomly.

Pair Corralation between Holy Stone and Pan Jit

Assuming the 90 days trading horizon Holy Stone Enterprise is expected to generate 0.53 times more return on investment than Pan Jit. However, Holy Stone Enterprise is 1.89 times less risky than Pan Jit. It trades about 0.19 of its potential returns per unit of risk. Pan Jit International is currently generating about 0.08 per unit of risk. If you would invest  8,470  in Holy Stone Enterprise on December 20, 2024 and sell it today you would earn a total of  820.00  from holding Holy Stone Enterprise or generate 9.68% return on investment over 90 days.

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

Holy Stone Enterprise  vs.  Pan Jit International

Holy Stone Enterprise

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Holy Stone Enterprise are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Holy Stone may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pan Jit International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pan Jit International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pan Jit may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Holy Stone and Pan Jit

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

The idea behind Holy Stone Enterprise and Pan Jit International 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.