Correlation Between Acco Brands and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both Acco Brands and Highway 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 Acco Brands and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acco Brands and Highway Holdings Limited, you can compare the effects of market volatilities on Acco Brands and Highway 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 Acco Brands with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and Highway Holdings.
Diversification Opportunities for Acco Brands and Highway Holdings
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Acco and Highway is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and Acco Brands 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 Acco Brands are associated (or correlated) with Highway Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highway Holdings has no effect on the direction of Acco Brands i.e., Acco Brands and Highway Holdings go up and down completely randomly.
Pair Corralation between Acco Brands and Highway Holdings
Given the investment horizon of 90 days Acco Brands is expected to generate 1.92 times more return on investment than Highway Holdings. However, Acco Brands is 1.92 times more volatile than Highway Holdings Limited. It trades about 0.14 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.16 per unit of risk. If you would invest 549.00 in Acco Brands on September 3, 2024 and sell it today you would earn a total of 33.00 from holding Acco Brands or generate 6.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acco Brands vs. Highway Holdings Limited
Performance |
| Timeline |
| Acco Brands |
| Highway Holdings |
Acco Brands and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acco Brands and Highway Holdings
The main advantage of trading using opposite Acco Brands and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acco Brands position performs unexpectedly, Highway 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 Highway Holdings will offset losses from the drop in Highway Holdings' long position.| Acco Brands vs. HNI Corp | Acco Brands vs. Steelcase | Acco Brands vs. Ennis Inc | Acco Brands vs. Acacia Research |
| Highway Holdings vs. Deswell Industries | Highway Holdings vs. SCOR PK | Highway Holdings vs. HUMANA INC | Highway Holdings vs. Aquagold International |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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