Correlation Between Highway Holdings and Lexinfintech Holdings
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Lexinfintech Holdings 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 Lexinfintech Holdings 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 Lexinfintech Holdings, you can compare the effects of market volatilities on Highway Holdings and Lexinfintech Holdings 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 Lexinfintech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Lexinfintech Holdings.
Diversification Opportunities for Highway Holdings and Lexinfintech Holdings
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highway and Lexinfintech is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Lexinfintech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexinfintech Holdings 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 Lexinfintech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexinfintech Holdings has no effect on the direction of Highway Holdings i.e., Highway Holdings and Lexinfintech Holdings go up and down completely randomly.
Pair Corralation between Highway Holdings and Lexinfintech Holdings
Given the investment horizon of 90 days Highway Holdings is expected to generate 10.09 times less return on investment than Lexinfintech Holdings. But when comparing it to its historical volatility, Highway Holdings Limited is 6.44 times less risky than Lexinfintech Holdings. It trades about 0.16 of its potential returns per unit of risk. Lexinfintech Holdings is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 367.00 in Lexinfintech Holdings on September 3, 2024 and sell it today you would earn a total of 140.00 from holding Lexinfintech Holdings or generate 38.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. Lexinfintech Holdings
Performance |
| Timeline |
| Highway Holdings |
| Lexinfintech Holdings |
Highway Holdings and Lexinfintech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Lexinfintech Holdings
The main advantage of trading using opposite Highway Holdings and Lexinfintech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Lexinfintech Holdings 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 Lexinfintech Holdings will offset losses from the drop in Lexinfintech Holdings' long position.| Highway Holdings vs. Deswell Industries | Highway Holdings vs. SCOR PK | Highway Holdings vs. HUMANA INC | Highway Holdings vs. Aquagold International |
| Lexinfintech Holdings vs. Highway Holdings Limited | Lexinfintech Holdings vs. QCR Holdings | Lexinfintech Holdings vs. Partner Communications | Lexinfintech Holdings vs. Acumen Pharmaceuticals |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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