Correlation Between Sinotrans and Holitech Technology

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

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

Diversification Opportunities for Sinotrans and Holitech Technology

0.38

Correlation Coefficient

Sinotrans  Holitech Technology

Weak diversification

The 3 months correlation between Sinotrans and Holitech is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sinotrans Ltd Class and Holitech Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holitech Technology and Sinotrans 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 Sinotrans Ltd Class 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 Sinotrans i.e., Sinotrans and Holitech Technology go up and down completely randomly.

Pair Corralation between Sinotrans and Holitech Technology

Assuming the 90 days trading horizon Sinotrans Ltd Class is expected to generate 0.29 times more return on investment than Holitech Technology. However, Sinotrans Ltd Class is 3.4 times less risky than Holitech Technology. It trades about 0.11 of its potential returns per unit of risk. Holitech Technology Co is currently generating about -0.03 per unit of risk. If you would invest  512.00  in Sinotrans Ltd Class on September 24, 2024 and sell it today you would earn a total of  11.00  from holding Sinotrans Ltd Class or generate 2.15% return on investment over 90 days.

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

Sinotrans Ltd Class  vs.  Holitech Technology Co

Sinotrans Class

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sinotrans Ltd Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinotrans may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Holitech Technology

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Holitech Technology Co are ranked lower than 27 (%) 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 Sinotrans and Holitech Technology

The main advantage of trading using opposite Sinotrans and Holitech Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinotrans 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 Sinotrans Ltd Class 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.