Correlation Between McDonalds and Hollysys Automation
Can any of the company-specific risk be diversified away by investing in both McDonalds and Hollysys Automation 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 McDonalds and Hollysys Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McDonalds and Hollysys Automation Technologies, you can compare the effects of market volatilities on McDonalds and Hollysys Automation 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 McDonalds with a short position of Hollysys Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Hollysys Automation.
Diversification Opportunities for McDonalds and Hollysys Automation
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between McDonalds and Hollysys is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Hollysys Automation Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollysys Automation and McDonalds 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 McDonalds are associated (or correlated) with Hollysys Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollysys Automation has no effect on the direction of McDonalds i.e., McDonalds and Hollysys Automation go up and down completely randomly.
Pair Corralation between McDonalds and Hollysys Automation
Considering the 90-day investment horizon McDonalds is expected to generate 3.64 times less return on investment than Hollysys Automation. But when comparing it to its historical volatility, McDonalds is 1.85 times less risky than Hollysys Automation. It trades about 0.03 of its potential returns per unit of risk. Hollysys Automation Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,736 in Hollysys Automation Technologies on August 31, 2024 and sell it today you would earn a total of 906.00 from holding Hollysys Automation Technologies or generate 52.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 81.55% |
| Values | Daily Returns |
McDonalds vs. Hollysys Automation Technologi
Performance |
| Timeline |
| McDonalds |
| Hollysys Automation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
McDonalds and Hollysys Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McDonalds and Hollysys Automation
The main advantage of trading using opposite McDonalds and Hollysys Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Hollysys Automation 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 Hollysys Automation will offset losses from the drop in Hollysys Automation's long position.| McDonalds vs. RLJ Lodging Trust | McDonalds vs. Aquagold International | McDonalds vs. Stepstone Group | McDonalds vs. Morningstar Unconstrained Allocation |
| Hollysys Automation vs. Huazhu Group | Hollysys Automation vs. VNET Group DRC | Hollysys Automation vs. Noah Holdings |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Stocks Directory Find actively traded stocks across global markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |