Correlation Between Highway Holdings and Awilco Drilling
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Awilco Drilling 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 Awilco Drilling 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 Awilco Drilling PLC, you can compare the effects of market volatilities on Highway Holdings and Awilco Drilling 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 Awilco Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Awilco Drilling.
Diversification Opportunities for Highway Holdings and Awilco Drilling
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Highway and Awilco is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Awilco Drilling PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awilco Drilling PLC 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 Awilco Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awilco Drilling PLC has no effect on the direction of Highway Holdings i.e., Highway Holdings and Awilco Drilling go up and down completely randomly.
Pair Corralation between Highway Holdings and Awilco Drilling
Given the investment horizon of 90 days Highway Holdings Limited is expected to generate 2.15 times more return on investment than Awilco Drilling. However, Highway Holdings is 2.15 times more volatile than Awilco Drilling PLC. It trades about 0.17 of its potential returns per unit of risk. Awilco Drilling PLC is currently generating about -0.21 per unit of risk. If you would invest 190.00 in Highway Holdings Limited on September 2, 2024 and sell it today you would earn a total of 8.00 from holding Highway Holdings Limited or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Highway Holdings Limited vs. Awilco Drilling PLC
Performance |
| Timeline |
| Highway Holdings |
| Awilco Drilling PLC |
Highway Holdings and Awilco Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Awilco Drilling
The main advantage of trading using opposite Highway Holdings and Awilco Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Awilco Drilling 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 Awilco Drilling will offset losses from the drop in Awilco Drilling'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 |
| Awilco Drilling vs. Mesa Air Group | Awilco Drilling vs. Fidus Investment Corp | Awilco Drilling vs. Sun Country Airlines | Awilco Drilling vs. Canlan Ice Sports |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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