Correlation Between Highway Holdings and China Aircraft
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and China Aircraft 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 China Aircraft 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 China Aircraft Leasing, you can compare the effects of market volatilities on Highway Holdings and China Aircraft 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 China Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and China Aircraft.
Diversification Opportunities for Highway Holdings and China Aircraft
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Highway and China is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and China Aircraft Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aircraft Leasing 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 China Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aircraft Leasing has no effect on the direction of Highway Holdings i.e., Highway Holdings and China Aircraft go up and down completely randomly.
Pair Corralation between Highway Holdings and China Aircraft
Given the investment horizon of 90 days Highway Holdings Limited is expected to under-perform the China Aircraft. But the stock apears to be less risky and, when comparing its historical volatility, Highway Holdings Limited is 1.7 times less risky than China Aircraft. The stock trades about -0.01 of its potential returns per unit of risk. The China Aircraft Leasing is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 19.00 in China Aircraft Leasing on September 5, 2024 and sell it today you would earn a total of 21.00 from holding China Aircraft Leasing or generate 110.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Highway Holdings Limited vs. China Aircraft Leasing
Performance |
| Timeline |
| Highway Holdings |
| China Aircraft Leasing |
Highway Holdings and China Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and China Aircraft
The main advantage of trading using opposite Highway Holdings and China Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, China Aircraft 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 China Aircraft will offset losses from the drop in China Aircraft'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 |
| China Aircraft vs. PepsiCo | China Aircraft vs. Molson Coors Brewing | China Aircraft vs. SNDL Inc | China Aircraft vs. Philip Morris International |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |