Correlation Between Hollysys Automation and Ocean Power

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

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

Diversification Opportunities for Hollysys Automation and Ocean Power

0.49

Correlation Coefficient

Hollysys Automation  Ocean Power

Very weak diversification

The 3 months correlation between Hollysys and Ocean is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hollysys Automation Technologi and Ocean Power Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Power Technologies and Hollysys Automation 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 Hollysys Automation Technologies are associated (or correlated) with Ocean Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Power Technologies has no effect on the direction of Hollysys Automation i.e., Hollysys Automation and Ocean Power go up and down completely randomly.

Pair Corralation between Hollysys Automation and Ocean Power

If you would invest  37.00  in Ocean Power Technologies on October 6, 2024 and sell it today you would earn a total of  74.00  from holding Ocean Power Technologies or generate 200.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

Hollysys Automation Technologi  vs.  Ocean Power Technologies

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.

Ocean Power Technologies

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ocean Power Technologies are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Ocean Power unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hollysys Automation and Ocean Power

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

The idea behind Hollysys Automation Technologies and Ocean Power 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.