Correlation Between FAT Brands and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both FAT Brands 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 FAT Brands and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAT Brands and Highway Holdings Limited, you can compare the effects of market volatilities on FAT Brands 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 FAT Brands with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAT Brands and Highway Holdings.
Diversification Opportunities for FAT Brands and Highway Holdings
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FAT and Highway is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding FAT Brands and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and FAT Brands 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 FAT Brands 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 FAT Brands i.e., FAT Brands and Highway Holdings go up and down completely randomly.
Pair Corralation between FAT Brands and Highway Holdings
Assuming the 90 days horizon FAT Brands is expected to generate 1.56 times more return on investment than Highway Holdings. However, FAT Brands is 1.56 times more volatile than Highway Holdings Limited. It trades about 0.02 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 511.00 in FAT Brands on September 3, 2024 and sell it today you would lose (48.00) from holding FAT Brands or give up 9.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
FAT Brands vs. Highway Holdings Limited
Performance |
| Timeline |
| FAT Brands |
| Highway Holdings |
FAT Brands and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAT Brands and Highway Holdings
The main advantage of trading using opposite FAT Brands and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAT Brands 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.| FAT Brands vs. Highway Holdings Limited | FAT Brands vs. QCR Holdings | FAT Brands vs. Partner Communications | FAT Brands 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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