Correlation Between Holy Stone and General Interface
Can any of the company-specific risk be diversified away by investing in both Holy Stone and General Interface 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 General Interface 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 General Interface Solution, you can compare the effects of market volatilities on Holy Stone and General Interface 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 General Interface. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holy Stone and General Interface.
Diversification Opportunities for Holy Stone and General Interface
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Holy and General is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Holy Stone Enterprise and General Interface Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Interface 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 General Interface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Interface has no effect on the direction of Holy Stone i.e., Holy Stone and General Interface go up and down completely randomly.
Pair Corralation between Holy Stone and General Interface
Assuming the 90 days trading horizon Holy Stone Enterprise is expected to under-perform the General Interface. But the stock apears to be less risky and, when comparing its historical volatility, Holy Stone Enterprise is 3.34 times less risky than General Interface. The stock trades about -0.14 of its potential returns per unit of risk. The General Interface Solution is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 5,670 in General Interface Solution on October 10, 2024 and sell it today you would lose (320.00) from holding General Interface Solution or give up 5.64% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Holy Stone Enterprise vs. General Interface Solution
Performance |
Timeline |
Holy Stone Enterprise |
General Interface |
Holy Stone and General Interface Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Holy Stone and General Interface
The main advantage of trading using opposite Holy Stone and General Interface positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holy Stone position performs unexpectedly, General Interface 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 General Interface will offset losses from the drop in General Interface's long position.Holy Stone vs. Walsin Technology Corp | Holy Stone vs. Yageo Corp | Holy Stone vs. Tripod Technology Corp | Holy Stone vs. Asia Optical Co |
General Interface vs. Holy Stone Enterprise | General Interface vs. Walsin Technology Corp | General Interface vs. Yageo Corp | General Interface vs. HannStar Board Corp |
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.
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