Correlation Between Holiday Entertainment and Microtips Technology
Can any of the company-specific risk be diversified away by investing in both Holiday Entertainment and Microtips Technology 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 Holiday Entertainment and Microtips Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holiday Entertainment Co and Microtips Technology, you can compare the effects of market volatilities on Holiday Entertainment and Microtips Technology 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 Holiday Entertainment with a short position of Microtips Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holiday Entertainment and Microtips Technology.
Diversification Opportunities for Holiday Entertainment and Microtips Technology
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Holiday and Microtips is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Entertainment Co and Microtips Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microtips Technology and Holiday Entertainment 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 Holiday Entertainment Co are associated (or correlated) with Microtips Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microtips Technology has no effect on the direction of Holiday Entertainment i.e., Holiday Entertainment and Microtips Technology go up and down completely randomly.
Pair Corralation between Holiday Entertainment and Microtips Technology
Assuming the 90 days trading horizon Holiday Entertainment Co is expected to under-perform the Microtips Technology. But the stock apears to be less risky and, when comparing its historical volatility, Holiday Entertainment Co is 2.85 times less risky than Microtips Technology. The stock trades about -0.29 of its potential returns per unit of risk. The Microtips Technology is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,685 in Microtips Technology on October 24, 2024 and sell it today you would lose (35.00) from holding Microtips Technology or give up 1.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holiday Entertainment Co vs. Microtips Technology
Performance |
| Timeline |
| Holiday Entertainment |
| Microtips Technology |
Holiday Entertainment and Microtips Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holiday Entertainment and Microtips Technology
The main advantage of trading using opposite Holiday Entertainment and Microtips Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holiday Entertainment position performs unexpectedly, Microtips Technology 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 Microtips Technology will offset losses from the drop in Microtips Technology's long position.| Holiday Entertainment vs. Yulon Finance Corp | Holiday Entertainment vs. Taiwan Secom Co | Holiday Entertainment vs. Taiwan Shin Kong | Holiday Entertainment vs. Formosa International Hotels |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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