Correlation Between Copa Holdings and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both Copa Holdings 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 Copa Holdings and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Copa Holdings SA and Highway Holdings Limited, you can compare the effects of market volatilities on Copa Holdings 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 Copa Holdings with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Highway Holdings.
Diversification Opportunities for Copa Holdings and Highway Holdings
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Copa and Highway is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and Copa Holdings 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 Copa Holdings SA 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 Copa Holdings i.e., Copa Holdings and Highway Holdings go up and down completely randomly.
Pair Corralation between Copa Holdings and Highway Holdings
Considering the 90-day investment horizon Copa Holdings SA is expected to generate 0.76 times more return on investment than Highway Holdings. However, Copa Holdings SA is 1.32 times less risky than Highway Holdings. It trades about 0.04 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.01 per unit of risk. If you would invest 8,001 in Copa Holdings SA on November 28, 2024 and sell it today you would earn a total of 1,382 from holding Copa Holdings SA or generate 17.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.08% |
| Values | Daily Returns |
Copa Holdings SA vs. Highway Holdings Limited
Performance |
| Timeline |
| Copa Holdings SA |
| Highway Holdings |
Copa Holdings and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Highway Holdings
The main advantage of trading using opposite Copa Holdings and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings 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.| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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