Correlation Between CMC Magnetics and Holy Stone
Can any of the company-specific risk be diversified away by investing in both CMC Magnetics and Holy Stone 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 CMC Magnetics and Holy Stone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Magnetics Corp and Holy Stone Enterprise, you can compare the effects of market volatilities on CMC Magnetics and Holy Stone 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 CMC Magnetics with a short position of Holy Stone. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Magnetics and Holy Stone.
Diversification Opportunities for CMC Magnetics and Holy Stone
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CMC and Holy is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CMC Magnetics Corp and Holy Stone Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holy Stone Enterprise and CMC Magnetics 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 CMC Magnetics Corp are associated (or correlated) with Holy Stone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holy Stone Enterprise has no effect on the direction of CMC Magnetics i.e., CMC Magnetics and Holy Stone go up and down completely randomly.
Pair Corralation between CMC Magnetics and Holy Stone
Assuming the 90 days trading horizon CMC Magnetics Corp is expected to under-perform the Holy Stone. In addition to that, CMC Magnetics is 1.11 times more volatile than Holy Stone Enterprise. It trades about -0.7 of its total potential returns per unit of risk. Holy Stone Enterprise is currently generating about -0.23 per unit of volatility. If you would invest 8,900 in Holy Stone Enterprise on October 9, 2024 and sell it today you would lose (340.00) from holding Holy Stone Enterprise or give up 3.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMC Magnetics Corp vs. Holy Stone Enterprise
Performance |
| Timeline |
| CMC Magnetics Corp |
| Holy Stone Enterprise |
CMC Magnetics and Holy Stone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Magnetics and Holy Stone
The main advantage of trading using opposite CMC Magnetics and Holy Stone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Magnetics position performs unexpectedly, Holy Stone 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 Holy Stone will offset losses from the drop in Holy Stone's long position.| CMC Magnetics vs. Ritek Corp | CMC Magnetics vs. Macronix International Co | CMC Magnetics vs. Winbond Electronics Corp | CMC Magnetics vs. Compal Electronics |
| Holy Stone vs. Walsin Technology Corp | Holy Stone vs. Yageo Corp | Holy Stone vs. Tripod Technology Corp | Holy Stone vs. Asia Optical Co |
Check out your portfolio center.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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