Correlation Between Cheniere Energy and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both Cheniere Energy 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 Cheniere Energy and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheniere Energy Partners and Highway Holdings Limited, you can compare the effects of market volatilities on Cheniere Energy 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 Cheniere Energy with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheniere Energy and Highway Holdings.
Diversification Opportunities for Cheniere Energy and Highway Holdings
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cheniere and Highway is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and Cheniere Energy 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 Cheniere Energy Partners 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 Cheniere Energy i.e., Cheniere Energy and Highway Holdings go up and down completely randomly.
Pair Corralation between Cheniere Energy and Highway Holdings
Considering the 90-day investment horizon Cheniere Energy Partners is expected to generate 0.4 times more return on investment than Highway Holdings. However, Cheniere Energy Partners is 2.5 times less risky than Highway Holdings. It trades about 0.13 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 4,620 in Cheniere Energy Partners on August 30, 2024 and sell it today you would earn a total of 1,047 from holding Cheniere Energy Partners or generate 22.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheniere Energy Partners vs. Highway Holdings Limited
Performance |
| Timeline |
| Cheniere Energy Partners |
| Highway Holdings |
Cheniere Energy and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheniere Energy and Highway Holdings
The main advantage of trading using opposite Cheniere Energy and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy 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.| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Genesis Energy LP | Cheniere Energy vs. Hess Midstream Partners | Cheniere Energy vs. Kinder Morgan |
| Highway Holdings vs. Northwest Pipe | Highway Holdings vs. Haynes International | Highway Holdings vs. Mayville Engineering Co | Highway Holdings vs. Ryerson Holding Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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