Correlation Between Highway Holdings and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and ServiceNow 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 ServiceNow 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 ServiceNow, you can compare the effects of market volatilities on Highway Holdings and ServiceNow 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 ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and ServiceNow.
Diversification Opportunities for Highway Holdings and ServiceNow
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highway and ServiceNow is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of Highway Holdings i.e., Highway Holdings and ServiceNow go up and down completely randomly.
Pair Corralation between Highway Holdings and ServiceNow
Given the investment horizon of 90 days Highway Holdings Limited is expected to under-perform the ServiceNow. In addition to that, Highway Holdings is 1.38 times more volatile than ServiceNow. It trades about -0.15 of its total potential returns per unit of risk. ServiceNow is currently generating about 0.33 per unit of volatility. If you would invest 95,658 in ServiceNow on August 25, 2024 and sell it today you would earn a total of 10,402 from holding ServiceNow or generate 10.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Highway Holdings Limited vs. ServiceNow
Performance |
| Timeline |
| Highway Holdings |
| ServiceNow |
Highway Holdings and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and ServiceNow
The main advantage of trading using opposite Highway Holdings and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow's long position.| Highway Holdings vs. CompoSecure | Highway Holdings vs. Dave Warrants | Highway Holdings vs. Evolv Technologies Holdings | Highway Holdings vs. Aquagold International |
| ServiceNow vs. Autodesk | ServiceNow vs. Intuit Inc | ServiceNow vs. Zoom Video Communications | ServiceNow vs. Snowflake |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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