Correlation Between Highway Holdings and American Express
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and American Express 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 Express 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 Express, you can compare the effects of market volatilities on Highway Holdings and American Express 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 Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and American Express.
Diversification Opportunities for Highway Holdings and American Express
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Highway and American is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express 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 Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Highway Holdings i.e., Highway Holdings and American Express go up and down completely randomly.
Pair Corralation between Highway Holdings and American Express
Given the investment horizon of 90 days Highway Holdings is expected to generate 1.31 times less return on investment than American Express. In addition to that, Highway Holdings is 2.67 times more volatile than American Express. It trades about 0.05 of its total potential returns per unit of risk. American Express is currently generating about 0.18 per unit of volatility. If you would invest 25,365 in American Express on September 3, 2024 and sell it today you would earn a total of 5,103 from holding American Express or generate 20.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. American Express
Performance |
| Timeline |
| Highway Holdings |
| American Express |
Highway Holdings and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and American Express
The main advantage of trading using opposite Highway Holdings and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, American Express 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 Express will offset losses from the drop in American Express' long position.| Highway Holdings vs. Deswell Industries | Highway Holdings vs. SCOR PK | Highway Holdings vs. HUMANA INC | Highway Holdings vs. Aquagold International |
| American Express vs. Highway Holdings Limited | American Express vs. QCR Holdings | American Express vs. Partner Communications | American Express vs. Acumen Pharmaceuticals |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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