Correlation Between Highway Holdings and Evolution Mining
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Evolution Mining 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 Evolution Mining 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 Evolution Mining, you can compare the effects of market volatilities on Highway Holdings and Evolution Mining 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 Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Evolution Mining.
Diversification Opportunities for Highway Holdings and Evolution Mining
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Highway and Evolution is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Highway Holdings i.e., Highway Holdings and Evolution Mining go up and down completely randomly.
Pair Corralation between Highway Holdings and Evolution Mining
Given the investment horizon of 90 days Highway Holdings is expected to generate 10.59 times less return on investment than Evolution Mining. But when comparing it to its historical volatility, Highway Holdings Limited is 1.37 times less risky than Evolution Mining. It trades about 0.01 of its potential returns per unit of risk. Evolution Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 201.00 in Evolution Mining on November 2, 2024 and sell it today you would earn a total of 145.00 from holding Evolution Mining or generate 72.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.76% |
| Values | Daily Returns |
Highway Holdings Limited vs. Evolution Mining
Performance |
| Timeline |
| Highway Holdings |
| Evolution Mining |
Highway Holdings and Evolution Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Evolution Mining
The main advantage of trading using opposite Highway Holdings and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Evolution Mining 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 Evolution Mining will offset losses from the drop in Evolution Mining'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 |
| Evolution Mining vs. Regis Resources | Evolution Mining vs. West African Resources | Evolution Mining vs. Allegiant Gold | Evolution Mining vs. Minaurum Gold |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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