Correlation Between Holiday Entertainment and Xintec

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

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

Diversification Opportunities for Holiday Entertainment and Xintec

0.35

Correlation Coefficient

Holiday Entertainment  Xintec

Weak diversification

The 3 months correlation between Holiday and Xintec is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Entertainment Co and Xintec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xintec and Holiday Entertainment 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 Holiday Entertainment Co are associated (or correlated) with Xintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xintec has no effect on the direction of Holiday Entertainment i.e., Holiday Entertainment and Xintec go up and down completely randomly.

Pair Corralation between Holiday Entertainment and Xintec

Assuming the 90 days trading horizon Holiday Entertainment Co is expected to under-perform the Xintec. But the stock apears to be less risky and, when comparing its historical volatility, Holiday Entertainment Co is 6.72 times less risky than Xintec. The stock trades about -0.22 of its potential returns per unit of risk. The Xintec is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  22,400  in Xintec on October 23, 2024 and sell it today you would lose (1,000.00) from holding Xintec or give up 4.46% of portfolio value over 90 days.

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

Holiday Entertainment Co  vs.  Xintec

Holiday Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holiday Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Xintec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xintec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Xintec 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 Holiday Entertainment and Xintec

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

The idea behind Holiday Entertainment Co and Xintec 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 Global Correlations module to find global opportunities by holding instruments from different markets.