Correlation Between Holy Stone and Flexium Interconnect
Can any of the company-specific risk be diversified away by investing in both Holy Stone and Flexium Interconnect 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 Flexium Interconnect 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 Flexium Interconnect, you can compare the effects of market volatilities on Holy Stone and Flexium Interconnect 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 Flexium Interconnect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holy Stone and Flexium Interconnect.
Diversification Opportunities for Holy Stone and Flexium Interconnect
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Holy and Flexium is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Holy Stone Enterprise and Flexium Interconnect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexium Interconnect 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 Flexium Interconnect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexium Interconnect has no effect on the direction of Holy Stone i.e., Holy Stone and Flexium Interconnect go up and down completely randomly.
Pair Corralation between Holy Stone and Flexium Interconnect
Assuming the 90 days trading horizon Holy Stone Enterprise is expected to generate 0.57 times more return on investment than Flexium Interconnect. However, Holy Stone Enterprise is 1.75 times less risky than Flexium Interconnect. It trades about -0.05 of its potential returns per unit of risk. Flexium Interconnect is currently generating about -0.11 per unit of risk. If you would invest 9,413 in Holy Stone Enterprise on October 13, 2024 and sell it today you would lose (763.00) from holding Holy Stone Enterprise or give up 8.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holy Stone Enterprise vs. Flexium Interconnect
Performance |
| Timeline |
| Holy Stone Enterprise |
| Flexium Interconnect |
Holy Stone and Flexium Interconnect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holy Stone and Flexium Interconnect
The main advantage of trading using opposite Holy Stone and Flexium Interconnect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holy Stone position performs unexpectedly, Flexium Interconnect 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 Flexium Interconnect will offset losses from the drop in Flexium Interconnect's long position.The idea behind Holy Stone Enterprise and Flexium Interconnect 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.| Flexium Interconnect vs. Holy Stone Enterprise | Flexium Interconnect vs. Walsin Technology Corp | Flexium Interconnect vs. Yageo Corp | Flexium Interconnect vs. HannStar Board Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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