Correlation Between Eos Energy and Hollysys Automation

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

By analyzing existing cross correlation between Eos Energy Enterprises and Hollysys Automation Technologies, you can compare the effects of market volatilities on Eos Energy and Hollysys Automation 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 Eos Energy with a short position of Hollysys Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eos Energy and Hollysys Automation.

Diversification Opportunities for Eos Energy and Hollysys Automation

0.77

Correlation Coefficient

Eos Energy  Hollysys Automation

Poor diversification

The 3 months correlation between Eos and Hollysys is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Eos Energy Enterprises and Hollysys Automation Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollysys Automation and Eos Energy 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 Eos Energy Enterprises are associated (or correlated) with Hollysys Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollysys Automation has no effect on the direction of Eos Energy i.e., Eos Energy and Hollysys Automation go up and down completely randomly.

Pair Corralation between Eos Energy and Hollysys Automation

Given the investment horizon of 90 days Eos Energy Enterprises is expected to generate 4.0 times more return on investment than Hollysys Automation. However, Eos Energy is 4.0 times more volatile than Hollysys Automation Technologies. It trades about 0.08 of its potential returns per unit of risk. Hollysys Automation Technologies is currently generating about 0.06 per unit of risk. If you would invest  140.00  in Eos Energy Enterprises on October 21, 2024 and sell it today you would earn a total of  462.00  from holding Eos Energy Enterprises or generate 330.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	75.6%
Values	Daily Returns

Eos Energy Enterprises  vs.  Hollysys Automation Technologi

Eos Energy Enterprises

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eos Energy Enterprises are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Eos Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hollysys Automation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hollysys Automation Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Hollysys Automation is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Eos Energy and Hollysys Automation

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

The idea behind Eos Energy Enterprises and Hollysys Automation Technologies 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.