Correlation Between CompoSecure and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both CompoSecure 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 CompoSecure and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompoSecure and Highway Holdings Limited, you can compare the effects of market volatilities on CompoSecure 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 CompoSecure with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompoSecure and Highway Holdings.
Diversification Opportunities for CompoSecure and Highway Holdings
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CompoSecure and Highway is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and CompoSecure 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 CompoSecure 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 CompoSecure i.e., CompoSecure and Highway Holdings go up and down completely randomly.
Pair Corralation between CompoSecure and Highway Holdings
Given the investment horizon of 90 days CompoSecure is expected to generate 3.74 times more return on investment than Highway Holdings. However, CompoSecure is 3.74 times more volatile than Highway Holdings Limited. It trades about 0.07 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.0 per unit of risk. If you would invest 1,557 in CompoSecure on August 29, 2024 and sell it today you would earn a total of 62.00 from holding CompoSecure or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompoSecure vs. Highway Holdings Limited
Performance |
| Timeline |
| CompoSecure |
| Highway Holdings |
CompoSecure and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompoSecure and Highway Holdings
The main advantage of trading using opposite CompoSecure and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompoSecure 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.| CompoSecure vs. Dave Warrants | CompoSecure vs. Evolv Technologies Holdings | CompoSecure vs. Aquagold International | CompoSecure vs. Morningstar Unconstrained Allocation |
| Highway Holdings vs. Dave Warrants | Highway Holdings vs. Evolv Technologies Holdings | Highway Holdings vs. Aquagold International | Highway Holdings vs. Morningstar Unconstrained Allocation |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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