Correlation Between Holiday Island and 4 Less
Can any of the company-specific risk be diversified away by investing in both Holiday Island and 4 Less 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 Island and 4 Less into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holiday Island Holdings and 4 Less Group, you can compare the effects of market volatilities on Holiday Island and 4 Less 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 Island with a short position of 4 Less. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holiday Island and 4 Less.
Diversification Opportunities for Holiday Island and 4 Less
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Holiday and FLES is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Island Holdings and 4 Less Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4 Less Group and Holiday Island 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 Island Holdings are associated (or correlated) with 4 Less. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4 Less Group has no effect on the direction of Holiday Island i.e., Holiday Island and 4 Less go up and down completely randomly.
Pair Corralation between Holiday Island and 4 Less
Given the investment horizon of 90 days Holiday Island Holdings is expected to generate 0.84 times more return on investment than 4 Less. However, Holiday Island Holdings is 1.19 times less risky than 4 Less. It trades about 0.15 of its potential returns per unit of risk. 4 Less Group is currently generating about 0.09 per unit of risk. If you would invest 2.33 in Holiday Island Holdings on September 1, 2024 and sell it today you would earn a total of 0.67 from holding Holiday Island Holdings or generate 28.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Holiday Island Holdings vs. 4 Less Group
Performance |
| Timeline |
| Holiday Island Holdings |
| 4 Less Group |
Holiday Island and 4 Less Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holiday Island and 4 Less
The main advantage of trading using opposite Holiday Island and 4 Less positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holiday Island position performs unexpectedly, 4 Less 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 4 Less will offset losses from the drop in 4 Less' long position.| Holiday Island vs. Hong Kong Land | Holiday Island vs. Wharf Holdings | Holiday Island vs. Sun Hung Kai | Holiday Island vs. Bayport International Holdings |
| 4 Less vs. Allison Transmission Holdings | 4 Less vs. Luminar Technologies | 4 Less vs. Quantumscape Corp | 4 Less vs. Lear Corporation |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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