Correlation Between Church Dwight and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both Church Dwight 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 Church Dwight and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Church Dwight and Highway Holdings Limited, you can compare the effects of market volatilities on Church Dwight 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 Church Dwight with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and Highway Holdings.
Diversification Opportunities for Church Dwight and Highway Holdings
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Church and Highway is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and Church Dwight 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 Church Dwight 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 Church Dwight i.e., Church Dwight and Highway Holdings go up and down completely randomly.
Pair Corralation between Church Dwight and Highway Holdings
Considering the 90-day investment horizon Church Dwight is expected to generate 2.84 times less return on investment than Highway Holdings. But when comparing it to its historical volatility, Church Dwight is 3.88 times less risky than Highway Holdings. It trades about 0.07 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 181.00 in Highway Holdings Limited on September 3, 2024 and sell it today you would earn a total of 17.00 from holding Highway Holdings Limited or generate 9.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Church Dwight vs. Highway Holdings Limited
Performance |
| Timeline |
| Church Dwight |
| Highway Holdings |
Church Dwight and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Church Dwight and Highway Holdings
The main advantage of trading using opposite Church Dwight and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Church Dwight 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.| Church Dwight vs. Highway Holdings Limited | Church Dwight vs. QCR Holdings | Church Dwight vs. Partner Communications | Church Dwight vs. Acumen Pharmaceuticals |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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