Correlation Between Pioneer Power and Hollysys Automation

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

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

Diversification Opportunities for Pioneer Power and Hollysys Automation

-0.61

Correlation Coefficient

Pioneer Power  Hollysys Automation

Excellent diversification

The 3 months correlation between Pioneer and Hollysys is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Power Solutions and Hollysys Automation Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollysys Automation and Pioneer Power 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 Pioneer Power Solutions 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 Pioneer Power i.e., Pioneer Power and Hollysys Automation go up and down completely randomly.

Pair Corralation between Pioneer Power and Hollysys Automation

If you would invest  377.00  in Pioneer Power Solutions on October 6, 2024 and sell it today you would earn a total of  40.00  from holding Pioneer Power Solutions or generate 10.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.61%
Values	Daily Returns

Pioneer Power Solutions  vs.  Hollysys Automation Technologi

Pioneer Power Solutions

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Power Solutions are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Pioneer Power demonstrated 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 Pioneer Power and Hollysys Automation

The main advantage of trading using opposite Pioneer Power and Hollysys Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pioneer Power 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 Pioneer Power Solutions 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.