Correlation Between Air Lease and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both Air Lease 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 Air Lease and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Highway Holdings Limited, you can compare the effects of market volatilities on Air Lease 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 Air Lease with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Highway Holdings.
Diversification Opportunities for Air Lease and Highway Holdings
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Air and Highway is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and Air Lease 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 Air Lease 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 Air Lease i.e., Air Lease and Highway Holdings go up and down completely randomly.
Pair Corralation between Air Lease and Highway Holdings
Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.72 times more return on investment than Highway Holdings. However, Air Lease is 1.38 times less risky than Highway Holdings. It trades about 0.05 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.02 per unit of risk. If you would invest 3,922 in Air Lease on September 12, 2024 and sell it today you would earn a total of 1,089 from holding Air Lease or generate 27.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Air Lease vs. Highway Holdings Limited
Performance |
| Timeline |
| Air Lease |
| Highway Holdings |
Air Lease and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Highway Holdings
The main advantage of trading using opposite Air Lease and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease 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.| Air Lease vs. McGrath RentCorp | Air Lease vs. Alta Equipment Group | Air Lease vs. Custom Truck One | Air Lease vs. GATX Corporation |
| Highway Holdings vs. Deswell Industries | Highway Holdings vs. Euro Tech Holdings | Highway Holdings vs. China Natural Resources | Highway Holdings vs. Arts Way Manufacturing Co |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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