Correlation Between Highway Holdings and American Hotel
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and American Hotel 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 American Hotel 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 American Hotel Income, you can compare the effects of market volatilities on Highway Holdings and American Hotel 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 American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and American Hotel.
Diversification Opportunities for Highway Holdings and American Hotel
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Highway and American is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income 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 American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Highway Holdings i.e., Highway Holdings and American Hotel go up and down completely randomly.
Pair Corralation between Highway Holdings and American Hotel
Given the investment horizon of 90 days Highway Holdings is expected to generate 2.98 times less return on investment than American Hotel. But when comparing it to its historical volatility, Highway Holdings Limited is 1.41 times less risky than American Hotel. It trades about 0.04 of its potential returns per unit of risk. American Hotel Income is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 34.00 in American Hotel Income on October 26, 2024 and sell it today you would earn a total of 13.00 from holding American Hotel Income or generate 38.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Highway Holdings Limited vs. American Hotel Income
Performance |
| Timeline |
| Highway Holdings |
| American Hotel Income |
Highway Holdings and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and American Hotel
The main advantage of trading using opposite Highway Holdings and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, American Hotel 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 American Hotel will offset losses from the drop in American Hotel'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 |
| American Hotel vs. Ashford Hospitality Trust | American Hotel vs. Ashford Hospitality Trust | American Hotel vs. Braemar Hotels Resorts | American Hotel vs. Braemar Hotels Resorts |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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