Correlation Between Highway Holdings and Consol Energy
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Consol Energy 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 Consol Energy 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 Consol Energy, you can compare the effects of market volatilities on Highway Holdings and Consol Energy 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 Consol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Consol Energy.
Diversification Opportunities for Highway Holdings and Consol Energy
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Highway and Consol is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy 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 Consol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consol Energy has no effect on the direction of Highway Holdings i.e., Highway Holdings and Consol Energy go up and down completely randomly.
Pair Corralation between Highway Holdings and Consol Energy
Given the investment horizon of 90 days Highway Holdings is expected to generate 97.81 times less return on investment than Consol Energy. In addition to that, Highway Holdings is 1.39 times more volatile than Consol Energy. It trades about 0.0 of its total potential returns per unit of risk. Consol Energy is currently generating about 0.1 per unit of volatility. If you would invest 9,846 in Consol Energy on September 2, 2024 and sell it today you would earn a total of 3,224 from holding Consol Energy or generate 32.74% 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. Consol Energy
Performance |
| Timeline |
| Highway Holdings |
| Consol Energy |
Highway Holdings and Consol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Consol Energy
The main advantage of trading using opposite Highway Holdings and Consol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Consol Energy 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 Consol Energy will offset losses from the drop in Consol Energy'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 |
| Consol Energy vs. Alliance Resource Partners | Consol Energy vs. Natural Resource Partners | Consol Energy vs. Hallador Energy | Consol Energy vs. NACCO Industries |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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