Correlation Between Highway Holdings and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley Direct, you can compare the effects of market volatilities on Highway Holdings and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Morgan Stanley.
Diversification Opportunities for Highway Holdings and Morgan Stanley
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Highway and Morgan is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Morgan Stanley Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Direct 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Direct has no effect on the direction of Highway Holdings i.e., Highway Holdings and Morgan Stanley go up and down completely randomly.
Pair Corralation between Highway Holdings and Morgan Stanley
Given the investment horizon of 90 days Highway Holdings is expected to generate 2.28 times less return on investment than Morgan Stanley. In addition to that, Highway Holdings is 1.75 times more volatile than Morgan Stanley Direct. It trades about 0.01 of its total potential returns per unit of risk. Morgan Stanley Direct is currently generating about 0.04 per unit of volatility. If you would invest 1,907 in Morgan Stanley Direct on September 17, 2024 and sell it today you would earn a total of 211.00 from holding Morgan Stanley Direct or generate 11.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 45.95% |
| Values | Daily Returns |
Highway Holdings Limited vs. Morgan Stanley Direct
Performance |
| Timeline |
| Highway Holdings |
| Morgan Stanley Direct |
Highway Holdings and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Morgan Stanley
The main advantage of trading using opposite Highway Holdings and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.| Highway Holdings vs. CompoSecure | Highway Holdings vs. Dave Warrants | Highway Holdings vs. Evolv Technologies Holdings | Highway Holdings vs. Aquagold International |
| Morgan Stanley vs. Griffon | Morgan Stanley vs. First Ship Lease | Morgan Stanley vs. HE Equipment Services | Morgan Stanley vs. Highway Holdings Limited |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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