Correlation Between Highway Holdings and BOS Better
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and BOS Better 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 BOS Better 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 BOS Better Online, you can compare the effects of market volatilities on Highway Holdings and BOS Better 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 BOS Better. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and BOS Better.
Diversification Opportunities for Highway Holdings and BOS Better
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Highway and BOS is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and BOS Better Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOS Better Online 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 BOS Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOS Better Online has no effect on the direction of Highway Holdings i.e., Highway Holdings and BOS Better go up and down completely randomly.
Pair Corralation between Highway Holdings and BOS Better
Given the investment horizon of 90 days Highway Holdings is expected to generate 3.16 times less return on investment than BOS Better. In addition to that, Highway Holdings is 1.44 times more volatile than BOS Better Online. It trades about 0.02 of its total potential returns per unit of risk. BOS Better Online is currently generating about 0.11 per unit of volatility. If you would invest 278.00 in BOS Better Online on November 7, 2024 and sell it today you would earn a total of 93.00 from holding BOS Better Online or generate 33.45% 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. BOS Better Online
Performance |
| Timeline |
| Highway Holdings |
| BOS Better Online |
Highway Holdings and BOS Better Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and BOS Better
The main advantage of trading using opposite Highway Holdings and BOS Better positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, BOS Better 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 BOS Better will offset losses from the drop in BOS Better'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 |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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