Correlation Between Espey Mfg and Hollysys Automation

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

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

Diversification Opportunities for Espey Mfg and Hollysys Automation

0.0

Correlation Coefficient

Espey Mfg  Hollysys Automation

Pay attention - limited upside

The 3 months correlation between Espey and Hollysys is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Espey Mfg Electronics and Hollysys Automation Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollysys Automation and Espey Mfg 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 Espey Mfg Electronics 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 Espey Mfg i.e., Espey Mfg and Hollysys Automation go up and down completely randomly.

Pair Corralation between Espey Mfg and Hollysys Automation

If you would invest (100.00) in Hollysys Automation Technologies on November 28, 2024 and sell it today you would earn a total of  100.00  from holding Hollysys Automation Technologies or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Espey Mfg Electronics  vs.  Hollysys Automation Technologi

Espey Mfg Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Espey Mfg Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Hollysys Automation

Risk-Adjusted Performance

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 Espey Mfg and Hollysys Automation

The main advantage of trading using opposite Espey Mfg and Hollysys Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Espey Mfg 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 Espey Mfg Electronics 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.