Correlation Between Systex Corp and Holy Stone

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

By analyzing existing cross correlation between Systex Corp and Holy Stone Enterprise, you can compare the effects of market volatilities on Systex Corp and Holy Stone 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 Systex Corp with a short position of Holy Stone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Systex Corp and Holy Stone.

Diversification Opportunities for Systex Corp and Holy Stone

-0.46

Correlation Coefficient

Systex Corp  Holy Stone

Very good diversification

The 3 months correlation between Systex and Holy is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Systex Corp and Holy Stone Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holy Stone Enterprise and Systex Corp 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 Systex Corp are associated (or correlated) with Holy Stone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holy Stone Enterprise has no effect on the direction of Systex Corp i.e., Systex Corp and Holy Stone go up and down completely randomly.

Pair Corralation between Systex Corp and Holy Stone

Assuming the 90 days trading horizon Systex Corp is expected to under-perform the Holy Stone. In addition to that, Systex Corp is 2.36 times more volatile than Holy Stone Enterprise. It trades about -0.35 of its total potential returns per unit of risk. Holy Stone Enterprise is currently generating about -0.15 per unit of volatility. If you would invest  8,900  in Holy Stone Enterprise on October 12, 2024 and sell it today you would lose (240.00) from holding Holy Stone Enterprise or give up 2.7% of portfolio value over 90 days.

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

Systex Corp  vs.  Holy Stone Enterprise

Systex Corp

Risk-Adjusted Performance

4 of 100

Modest

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

Holy Stone Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holy Stone Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Holy Stone is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Systex Corp and Holy Stone

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

The idea behind Systex Corp and Holy Stone Enterprise 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.