Correlation Between Highway Holdings and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Asbury Automotive 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 Highway Holdings and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highway Holdings Limited and Asbury Automotive Group, you can compare the effects of market volatilities on Highway Holdings and Asbury Automotive 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 Highway Holdings with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Asbury Automotive.
Diversification Opportunities for Highway Holdings and Asbury Automotive
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Highway and Asbury is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Highway 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 Highway Holdings Limited are associated (or correlated) with Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of Highway Holdings i.e., Highway Holdings and Asbury Automotive go up and down completely randomly.
Pair Corralation between Highway Holdings and Asbury Automotive
Given the investment horizon of 90 days Highway Holdings is expected to generate 19.22 times less return on investment than Asbury Automotive. But when comparing it to its historical volatility, Highway Holdings Limited is 2.76 times less risky than Asbury Automotive. It trades about 0.03 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 23,303 in Asbury Automotive Group on August 31, 2024 and sell it today you would earn a total of 2,700 from holding Asbury Automotive Group or generate 11.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. Asbury Automotive Group
Performance |
| Timeline |
| Highway Holdings |
| Asbury Automotive |
Highway Holdings and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Asbury Automotive
The main advantage of trading using opposite Highway Holdings and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Asbury Automotive 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 Asbury Automotive will offset losses from the drop in Asbury Automotive's long position.| Highway Holdings vs. Deswell Industries | Highway Holdings vs. Euro Tech Holdings | Highway Holdings vs. China Natural Resources | Highway Holdings vs. Arts Way Manufacturing Co |
| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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