Correlation Between European Wax and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both European Wax 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 European Wax and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Wax Center and Highway Holdings Limited, you can compare the effects of market volatilities on European Wax 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 European Wax with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and Highway Holdings.
Diversification Opportunities for European Wax and Highway Holdings
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between European and Highway is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and European Wax 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 European Wax Center 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 European Wax i.e., European Wax and Highway Holdings go up and down completely randomly.
Pair Corralation between European Wax and Highway Holdings
Given the investment horizon of 90 days European Wax is expected to generate 1.8 times less return on investment than Highway Holdings. In addition to that, European Wax is 3.69 times more volatile than Highway Holdings Limited. It trades about 0.04 of its total potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.28 per unit of volatility. If you would invest 188.00 in Highway Holdings Limited on October 7, 2024 and sell it today you would earn a total of 14.00 from holding Highway Holdings Limited or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Wax Center vs. Highway Holdings Limited
Performance |
| Timeline |
| European Wax Center |
| Highway Holdings |
European Wax and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Wax and Highway Holdings
The main advantage of trading using opposite European Wax and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax 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.| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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