Correlation Between Holiday Island and Koss

Can any of the company-specific risk be diversified away by investing in both Holiday Island and Koss 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 Koss 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 Koss Corporation, you can compare the effects of market volatilities on Holiday Island and Koss 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 Koss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holiday Island and Koss.

Diversification Opportunities for Holiday Island and Koss

-0.13

Correlation Coefficient

Holiday Island  Koss

Good diversification

The 3 months correlation between Holiday and Koss is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Island Holdings and Koss Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koss 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 Koss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koss has no effect on the direction of Holiday Island i.e., Holiday Island and Koss go up and down completely randomly.

Pair Corralation between Holiday Island and Koss

Given the investment horizon of 90 days Holiday Island Holdings is expected to generate 5.2 times more return on investment than Koss. However, Holiday Island is 5.2 times more volatile than Koss Corporation. It trades about 0.04 of its potential returns per unit of risk. Koss Corporation is currently generating about 0.04 per unit of risk. If you would invest  3.76  in Holiday Island Holdings on September 12, 2024 and sell it today you would lose (1.51) from holding Holiday Island Holdings or give up 40.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Holiday Island Holdings  vs.  Koss Corp.

Holiday Island Holdings

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Holiday Island Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Holiday Island demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Koss

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Koss Corporation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Koss may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Holiday Island and Koss

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

The idea behind Holiday Island Holdings and Koss Corporation 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.