Correlation Between Jinhui Liquor and Holitech Technology

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

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

Diversification Opportunities for Jinhui Liquor and Holitech Technology

0.64

Correlation Coefficient

Jinhui Liquor  Holitech Technology

Poor diversification

The 3 months correlation between Jinhui and Holitech is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Jinhui Liquor Co and Holitech Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holitech Technology and Jinhui Liquor 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 Jinhui Liquor Co 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 Jinhui Liquor i.e., Jinhui Liquor and Holitech Technology go up and down completely randomly.

Pair Corralation between Jinhui Liquor and Holitech Technology

Assuming the 90 days trading horizon Jinhui Liquor Co is expected to generate 0.59 times more return on investment than Holitech Technology. However, Jinhui Liquor Co is 1.7 times less risky than Holitech Technology. It trades about 0.0 of its potential returns per unit of risk. Holitech Technology Co is currently generating about -0.15 per unit of risk. If you would invest  2,069  in Jinhui Liquor Co on September 19, 2024 and sell it today you would lose (11.00) from holding Jinhui Liquor Co or give up 0.53% of portfolio value over 90 days.

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

Jinhui Liquor Co  vs.  Holitech Technology Co

Jinhui Liquor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jinhui Liquor Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jinhui Liquor sustained solid returns over the last few months and may actually be approaching a breakup point.

Holitech Technology

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Holitech Technology Co are ranked lower than 23 (%) 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 Jinhui Liquor and Holitech Technology

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