Correlation Between China Fund and Holitech Technology

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

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

Diversification Opportunities for China Fund and Holitech Technology

-0.3

Correlation Coefficient

China Fund  Holitech Technology

Very good diversification

The 3 months correlation between China and Holitech is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding China Fund Management and Holitech Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holitech Technology and China Fund 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 China Fund Management 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 China Fund i.e., China Fund and Holitech Technology go up and down completely randomly.

Pair Corralation between China Fund and Holitech Technology

Assuming the 90 days trading horizon China Fund Management is expected to under-perform the Holitech Technology. But the stock apears to be less risky and, when comparing its historical volatility, China Fund Management is 9.53 times less risky than Holitech Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Holitech Technology Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  137.00  in Holitech Technology Co on September 3, 2024 and sell it today you would earn a total of  82.00  from holding Holitech Technology Co or generate 59.85% return on investment over 90 days.

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

China Fund Management  vs.  Holitech Technology Co

China Fund Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Fund Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Holitech Technology

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Holitech Technology Co are ranked lower than 19 (%) 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 China Fund and Holitech Technology

The main advantage of trading using opposite China Fund and Holitech Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Fund 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 China Fund Management 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.