Correlation Between Highway Holdings and Nova Vision
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Nova Vision 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 Nova Vision 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 Nova Vision Acquisition, you can compare the effects of market volatilities on Highway Holdings and Nova Vision 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 Nova Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Nova Vision.
Diversification Opportunities for Highway Holdings and Nova Vision
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highway and Nova is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Nova Vision Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Vision 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 Nova Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Vision Acquisition has no effect on the direction of Highway Holdings i.e., Highway Holdings and Nova Vision go up and down completely randomly.
Pair Corralation between Highway Holdings and Nova Vision
Given the investment horizon of 90 days Highway Holdings is expected to generate 20.99 times less return on investment than Nova Vision. But when comparing it to its historical volatility, Highway Holdings Limited is 6.09 times less risky than Nova Vision. It trades about 0.04 of its potential returns per unit of risk. Nova Vision Acquisition is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,284 in Nova Vision Acquisition on August 31, 2024 and sell it today you would earn a total of 2,816 from holding Nova Vision Acquisition or generate 219.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.06% |
| Values | Daily Returns |
Highway Holdings Limited vs. Nova Vision Acquisition
Performance |
| Timeline |
| Highway Holdings |
| Nova Vision Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Highway Holdings and Nova Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Nova Vision
The main advantage of trading using opposite Highway Holdings and Nova Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Nova Vision 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 Nova Vision will offset losses from the drop in Nova Vision'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 |
| Nova Vision vs. RadNet Inc | Nova Vision vs. Grupo Aeroportuario del | Nova Vision vs. Lipocine | Nova Vision vs. enVVeno Medical Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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