Correlation Between Highway Holdings and Horizon Space
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Horizon Space 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 Horizon Space 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 Horizon Space Acquisition, you can compare the effects of market volatilities on Highway Holdings and Horizon Space 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 Horizon Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Horizon Space.
Diversification Opportunities for Highway Holdings and Horizon Space
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Highway and Horizon is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Horizon Space Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Space Acquisition 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 Horizon Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Space Acquisition has no effect on the direction of Highway Holdings i.e., Highway Holdings and Horizon Space go up and down completely randomly.
Pair Corralation between Highway Holdings and Horizon Space
Given the investment horizon of 90 days Highway Holdings is expected to generate 263.57 times less return on investment than Horizon Space. But when comparing it to its historical volatility, Highway Holdings Limited is 14.79 times less risky than Horizon Space. It trades about 0.03 of its potential returns per unit of risk. Horizon Space Acquisition is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 8.60 in Horizon Space Acquisition on September 12, 2024 and sell it today you would earn a total of 3.40 from holding Horizon Space Acquisition or generate 39.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 22.73% |
| Values | Daily Returns |
Highway Holdings Limited vs. Horizon Space Acquisition
Performance |
| Timeline |
| Highway Holdings |
| Horizon Space Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Highway Holdings and Horizon Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Horizon Space
The main advantage of trading using opposite Highway Holdings and Horizon Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Horizon Space 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 Horizon Space will offset losses from the drop in Horizon Space'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 |
| Horizon Space vs. HUMANA INC | Horizon Space vs. Barloworld Ltd ADR | Horizon Space vs. Morningstar Unconstrained Allocation | Horizon Space vs. Thrivent High Yield |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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