Correlation Between Holitech Technology and Guotai Junan

Can any of the company-specific risk be diversified away by investing in both Holitech Technology and Guotai Junan 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 Holitech Technology and Guotai Junan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Holitech Technology Co and Guotai Junan Securities, you can compare the effects of market volatilities on Holitech Technology and Guotai Junan 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 Holitech Technology with a short position of Guotai Junan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holitech Technology and Guotai Junan.

Diversification Opportunities for Holitech Technology and Guotai Junan

0.47

Correlation Coefficient

Holitech Technology  Guotai Junan

Very weak diversification

The 3 months correlation between Holitech and Guotai is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Holitech Technology Co and Guotai Junan Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guotai Junan Securities and Holitech Technology 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 Holitech Technology Co are associated (or correlated) with Guotai Junan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guotai Junan Securities has no effect on the direction of Holitech Technology i.e., Holitech Technology and Guotai Junan go up and down completely randomly.

Pair Corralation between Holitech Technology and Guotai Junan

Assuming the 90 days trading horizon Holitech Technology Co is expected to generate 1.28 times more return on investment than Guotai Junan. However, Holitech Technology is 1.28 times more volatile than Guotai Junan Securities. It trades about 0.34 of its potential returns per unit of risk. Guotai Junan Securities is currently generating about 0.17 per unit of risk. If you would invest  136.00  in Holitech Technology Co on September 28, 2024 and sell it today you would earn a total of  128.00  from holding Holitech Technology Co or generate 94.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Holitech Technology Co  vs.  Guotai Junan Securities

Holitech Technology

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Holitech Technology Co are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Holitech Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Guotai Junan Securities

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guotai Junan Securities are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guotai Junan sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Holitech Technology and Guotai Junan

The main advantage of trading using opposite Holitech Technology and Guotai Junan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holitech Technology position performs unexpectedly, Guotai Junan 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 Guotai Junan will offset losses from the drop in Guotai Junan's long position.

The idea behind Holitech Technology Co and Guotai Junan Securities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.