Correlation Between Highway Holdings and Lifevantage
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Lifevantage 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 Lifevantage 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 Lifevantage, you can compare the effects of market volatilities on Highway Holdings and Lifevantage 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 Lifevantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Lifevantage.
Diversification Opportunities for Highway Holdings and Lifevantage
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highway and Lifevantage is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage 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 Lifevantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifevantage has no effect on the direction of Highway Holdings i.e., Highway Holdings and Lifevantage go up and down completely randomly.
Pair Corralation between Highway Holdings and Lifevantage
Given the investment horizon of 90 days Highway Holdings is expected to generate 17.96 times less return on investment than Lifevantage. But when comparing it to its historical volatility, Highway Holdings Limited is 1.47 times less risky than Lifevantage. It trades about 0.01 of its potential returns per unit of risk. Lifevantage is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 345.00 in Lifevantage on August 24, 2024 and sell it today you would earn a total of 1,048 from holding Lifevantage or generate 303.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Highway Holdings Limited vs. Lifevantage
Performance |
| Timeline |
| Highway Holdings |
| Lifevantage |
Highway Holdings and Lifevantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Lifevantage
The main advantage of trading using opposite Highway Holdings and Lifevantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Lifevantage 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 Lifevantage will offset losses from the drop in Lifevantage'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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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