Correlation Between Hollysys Automation and Pioneer Power

Can any of the company-specific risk be diversified away by investing in both Hollysys Automation and Pioneer Power 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 Hollysys Automation and Pioneer Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hollysys Automation Technologies and Pioneer Power Solutions, you can compare the effects of market volatilities on Hollysys Automation and Pioneer Power 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 Hollysys Automation with a short position of Pioneer Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hollysys Automation and Pioneer Power.

Diversification Opportunities for Hollysys Automation and Pioneer Power

0.07

Correlation Coefficient

Hollysys Automation  Pioneer Power

Significant diversification

The 3 months correlation between Hollysys and Pioneer is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Hollysys Automation Technologi and Pioneer Power Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Power Solutions and Hollysys Automation 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 Hollysys Automation Technologies are associated (or correlated) with Pioneer Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Power Solutions has no effect on the direction of Hollysys Automation i.e., Hollysys Automation and Pioneer Power go up and down completely randomly.

Pair Corralation between Hollysys Automation and Pioneer Power

Given the investment horizon of 90 days Hollysys Automation Technologies is expected to generate 0.84 times more return on investment than Pioneer Power. However, Hollysys Automation Technologies is 1.19 times less risky than Pioneer Power. It trades about 0.2 of its potential returns per unit of risk. Pioneer Power Solutions is currently generating about 0.13 per unit of risk. If you would invest  2,137  in Hollysys Automation Technologies on September 2, 2024 and sell it today you would earn a total of  505.00  from holding Hollysys Automation Technologies or generate 23.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	29.37%
Values	Daily Returns

Hollysys Automation Technologi  vs.  Pioneer Power Solutions

Hollysys Automation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hollysys Automation Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Hollysys Automation is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pioneer Power Solutions

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Power Solutions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Pioneer Power demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hollysys Automation and Pioneer Power

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

The idea behind Hollysys Automation Technologies and Pioneer Power Solutions 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.