Correlation Between Holiday Entertainment and Great Computer
Can any of the company-specific risk be diversified away by investing in both Holiday Entertainment and Great Computer 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 Great Computer 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 Great Computer, you can compare the effects of market volatilities on Holiday Entertainment and Great Computer 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 Great Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holiday Entertainment and Great Computer.
Diversification Opportunities for Holiday Entertainment and Great Computer
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Holiday and Great is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Entertainment Co and Great Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Computer 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 Great Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Computer has no effect on the direction of Holiday Entertainment i.e., Holiday Entertainment and Great Computer go up and down completely randomly.
Pair Corralation between Holiday Entertainment and Great Computer
Assuming the 90 days trading horizon Holiday Entertainment Co is expected to generate 0.13 times more return on investment than Great Computer. However, Holiday Entertainment Co is 7.51 times less risky than Great Computer. It trades about -0.18 of its potential returns per unit of risk. Great Computer is currently generating about -0.19 per unit of risk. If you would invest 7,890 in Holiday Entertainment Co on October 29, 2024 and sell it today you would lose (140.00) from holding Holiday Entertainment Co or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holiday Entertainment Co vs. Great Computer
Performance |
| Timeline |
| Holiday Entertainment |
| Great Computer |
Holiday Entertainment and Great Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holiday Entertainment and Great Computer
The main advantage of trading using opposite Holiday Entertainment and Great Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holiday Entertainment position performs unexpectedly, Great Computer 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 Great Computer will offset losses from the drop in Great Computer'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 |
| Great Computer vs. Oceanic Beverages Co | Great Computer vs. Ruentex Engineering Construction | Great Computer vs. Chumpower Machinery Corp | Great Computer vs. Cathay Chemical Works |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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