Correlation Between 3M and Hollysys Automation
Can any of the company-specific risk be diversified away by investing in both 3M 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 3M and Hollysys Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Hollysys Automation Technologies, you can compare the effects of market volatilities on 3M 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 3M with a short position of Hollysys Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Hollysys Automation.
Diversification Opportunities for 3M and Hollysys Automation
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and Hollysys is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Hollysys Automation Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollysys Automation and 3M 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 3M Company 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 3M i.e., 3M and Hollysys Automation go up and down completely randomly.
Pair Corralation between 3M and Hollysys Automation
Considering the 90-day investment horizon 3M is expected to generate 1.48 times less return on investment than Hollysys Automation. In addition to that, 3M is 1.04 times more volatile than Hollysys Automation Technologies. It trades about 0.04 of its total potential returns per unit of risk. Hollysys Automation Technologies is currently generating about 0.07 per unit of volatility. 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 | Insignificant |
| Accuracy | 81.55% |
| Values | Daily Returns |
3M Company vs. Hollysys Automation Technologi
Performance |
| Timeline |
| 3M Company |
| Hollysys Automation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
3M and Hollysys Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Hollysys Automation
The main advantage of trading using opposite 3M and Hollysys Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M 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.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| 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 CEOs Directory module to screen CEOs from public companies around the world.
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