Correlation Between Wholetech System and HOYA Resort

Can any of the company-specific risk be diversified away by investing in both Wholetech System and HOYA Resort 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 Wholetech System and HOYA Resort into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wholetech System Hitech and HOYA Resort Hotel, you can compare the effects of market volatilities on Wholetech System and HOYA Resort 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 Wholetech System with a short position of HOYA Resort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wholetech System and HOYA Resort.

Diversification Opportunities for Wholetech System and HOYA Resort

0.38

Correlation Coefficient

Wholetech System  HOYA Resort

Weak diversification

The 3 months correlation between Wholetech and HOYA is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Wholetech System Hitech and HOYA Resort Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA Resort Hotel and Wholetech System 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 Wholetech System Hitech are associated (or correlated) with HOYA Resort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA Resort Hotel has no effect on the direction of Wholetech System i.e., Wholetech System and HOYA Resort go up and down completely randomly.

Pair Corralation between Wholetech System and HOYA Resort

Assuming the 90 days trading horizon Wholetech System is expected to generate 1.79 times less return on investment than HOYA Resort. But when comparing it to its historical volatility, Wholetech System Hitech is 1.95 times less risky than HOYA Resort. It trades about 0.13 of its potential returns per unit of risk. HOYA Resort Hotel is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,880  in HOYA Resort Hotel on October 11, 2024 and sell it today you would earn a total of  165.00  from holding HOYA Resort Hotel or generate 8.78% return on investment over 90 days.

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

Wholetech System Hitech  vs.  HOYA Resort Hotel

Wholetech System Hitech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wholetech System Hitech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Wholetech System may actually be approaching a critical reversion point that can send shares even higher in February 2025.

HOYA Resort Hotel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HOYA Resort Hotel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, HOYA Resort may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Wholetech System and HOYA Resort

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

The idea behind Wholetech System Hitech and HOYA Resort Hotel 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.