Correlation Between Vertiv Holdings and Hollysys Automation
Can any of the company-specific risk be diversified away by investing in both Vertiv Holdings 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 Vertiv Holdings and Hollysys Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vertiv Holdings Co and Hollysys Automation Technologies, you can compare the effects of market volatilities on Vertiv Holdings 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 Vertiv Holdings with a short position of Hollysys Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vertiv Holdings and Hollysys Automation.
Diversification Opportunities for Vertiv Holdings and Hollysys Automation
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vertiv and Hollysys is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vertiv Holdings Co and Hollysys Automation Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollysys Automation and Vertiv Holdings 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 Vertiv Holdings Co 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 Vertiv Holdings i.e., Vertiv Holdings and Hollysys Automation go up and down completely randomly.
Pair Corralation between Vertiv Holdings and Hollysys Automation
Considering the 90-day investment horizon Vertiv Holdings Co is expected to generate 1.89 times more return on investment than Hollysys Automation. However, Vertiv Holdings is 1.89 times more volatile than Hollysys Automation Technologies. It trades about 0.15 of its potential returns per unit of risk. Hollysys Automation Technologies is currently generating about 0.06 per unit of risk. If you would invest 1,410 in Vertiv Holdings Co on August 28, 2024 and sell it today you would earn a total of 11,793 from holding Vertiv Holdings Co or generate 836.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.93% |
| Values | Daily Returns |
Vertiv Holdings Co vs. Hollysys Automation Technologi
Performance |
| Timeline |
| Vertiv Holdings |
| Hollysys Automation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Vertiv Holdings and Hollysys Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vertiv Holdings and Hollysys Automation
The main advantage of trading using opposite Vertiv Holdings and Hollysys Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertiv Holdings 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.| Vertiv Holdings vs. nVent Electric PLC | Vertiv Holdings vs. Hubbell | Vertiv Holdings vs. Advanced Energy Industries | Vertiv Holdings vs. Energizer 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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