Correlation Between Highway Holdings and Black Hills
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Black Hills 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 Black Hills 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 Black Hills, you can compare the effects of market volatilities on Highway Holdings and Black Hills 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 Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Black Hills.
Diversification Opportunities for Highway Holdings and Black Hills
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Highway and Black is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills 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 Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Highway Holdings i.e., Highway Holdings and Black Hills go up and down completely randomly.
Pair Corralation between Highway Holdings and Black Hills
Given the investment horizon of 90 days Highway Holdings Limited is expected to generate 2.1 times more return on investment than Black Hills. However, Highway Holdings is 2.1 times more volatile than Black Hills. It trades about 0.01 of its potential returns per unit of risk. Black Hills is currently generating about 0.01 per unit of risk. If you would invest 214.00 in Highway Holdings Limited on September 2, 2024 and sell it today you would lose (16.00) from holding Highway Holdings Limited or give up 7.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Highway Holdings Limited vs. Black Hills
Performance |
| Timeline |
| Highway Holdings |
| Black Hills |
Highway Holdings and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Black Hills
The main advantage of trading using opposite Highway Holdings and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' 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 |
| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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