Correlation Between Hollysys Automation and Vertiv Holdings

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

Diversification Opportunities for Hollysys Automation and Vertiv Holdings

-0.85

Correlation Coefficient

Hollysys Automation  Vertiv Holdings

Pay attention - limited upside

The 3 months correlation between Hollysys and Vertiv is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hollysys Automation Technologi and Vertiv Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertiv Holdings 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 Vertiv Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertiv Holdings has no effect on the direction of Hollysys Automation i.e., Hollysys Automation and Vertiv Holdings go up and down completely randomly.

Pair Corralation between Hollysys Automation and Vertiv Holdings

Given the investment horizon of 90 days Hollysys Automation Technologies is expected to under-perform the Vertiv Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Hollysys Automation Technologies is 3.27 times less risky than Vertiv Holdings. The stock trades about -0.22 of its potential returns per unit of risk. The Vertiv Holdings Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  6,629  in Vertiv Holdings Co on February 26, 2024 and sell it today you would earn a total of  3,988  from holding Vertiv Holdings Co or generate 60.16% return on investment over 90 days.

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

Hollysys Automation Technologi  vs.  Vertiv Holdings Co

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 uncertain performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Vertiv Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vertiv Holdings Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vertiv Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hollysys Automation and Vertiv Holdings

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

The idea behind Hollysys Automation Technologies and Vertiv Holdings Co 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 Commodity Directory module to find actively traded commodities issued by global exchanges.