Correlation Between Holy Stone and Weltrend Semiconductor
Can any of the company-specific risk be diversified away by investing in both Holy Stone and Weltrend Semiconductor 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 Holy Stone and Weltrend Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holy Stone Enterprise and Weltrend Semiconductor, you can compare the effects of market volatilities on Holy Stone and Weltrend Semiconductor 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 Holy Stone with a short position of Weltrend Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holy Stone and Weltrend Semiconductor.
Diversification Opportunities for Holy Stone and Weltrend Semiconductor
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Holy and Weltrend is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Holy Stone Enterprise and Weltrend Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weltrend Semiconductor and Holy Stone 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 Holy Stone Enterprise are associated (or correlated) with Weltrend Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weltrend Semiconductor has no effect on the direction of Holy Stone i.e., Holy Stone and Weltrend Semiconductor go up and down completely randomly.
Pair Corralation between Holy Stone and Weltrend Semiconductor
Assuming the 90 days trading horizon Holy Stone Enterprise is expected to generate 0.41 times more return on investment than Weltrend Semiconductor. However, Holy Stone Enterprise is 2.44 times less risky than Weltrend Semiconductor. It trades about -0.23 of its potential returns per unit of risk. Weltrend Semiconductor is currently generating about -0.17 per unit of risk. 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 Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holy Stone Enterprise vs. Weltrend Semiconductor
Performance |
| Timeline |
| Holy Stone Enterprise |
| Weltrend Semiconductor |
Holy Stone and Weltrend Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holy Stone and Weltrend Semiconductor
The main advantage of trading using opposite Holy Stone and Weltrend Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holy Stone position performs unexpectedly, Weltrend Semiconductor 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 Weltrend Semiconductor will offset losses from the drop in Weltrend Semiconductor's long position.| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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