Correlation Between Walsin Technology and Holy Stone
Can any of the company-specific risk be diversified away by investing in both Walsin Technology 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 Walsin Technology and Holy Stone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walsin Technology Corp and Holy Stone Enterprise, you can compare the effects of market volatilities on Walsin Technology 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 Walsin Technology with a short position of Holy Stone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walsin Technology and Holy Stone.
Diversification Opportunities for Walsin Technology and Holy Stone
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walsin and Holy is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Walsin Technology 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 Walsin Technology 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 Walsin Technology 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 Walsin Technology i.e., Walsin Technology and Holy Stone go up and down completely randomly.
Pair Corralation between Walsin Technology and Holy Stone
Assuming the 90 days trading horizon Walsin Technology is expected to generate 1.04 times less return on investment than Holy Stone. In addition to that, Walsin Technology is 3.94 times more volatile than Holy Stone Enterprise. It trades about 0.05 of its total potential returns per unit of risk. Holy Stone Enterprise is currently generating about 0.22 per unit of volatility. If you would invest 8,560 in Holy Stone Enterprise on November 3, 2024 and sell it today you would earn a total of 150.00 from holding Holy Stone Enterprise or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walsin Technology Corp vs. Holy Stone Enterprise
Performance |
| Timeline |
| Walsin Technology Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Holy Stone Enterprise |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walsin Technology and Holy Stone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walsin Technology and Holy Stone
The main advantage of trading using opposite Walsin Technology and Holy Stone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walsin Technology 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.The idea behind Walsin Technology Corp and Holy Stone Enterprise 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.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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |