Correlation Between Highway Holdings and Old Republic
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Old Republic 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 Old Republic 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 Old Republic International, you can compare the effects of market volatilities on Highway Holdings and Old Republic 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 Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Old Republic.
Diversification Opportunities for Highway Holdings and Old Republic
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Highway and Old is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna 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 Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of Highway Holdings i.e., Highway Holdings and Old Republic go up and down completely randomly.
Pair Corralation between Highway Holdings and Old Republic
Given the investment horizon of 90 days Highway Holdings is expected to generate 3.18 times less return on investment than Old Republic. In addition to that, Highway Holdings is 1.08 times more volatile than Old Republic International. It trades about 0.16 of its total potential returns per unit of risk. Old Republic International is currently generating about 0.54 per unit of volatility. If you would invest 3,465 in Old Republic International on September 3, 2024 and sell it today you would earn a total of 432.00 from holding Old Republic International or generate 12.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. Old Republic International
Performance |
| Timeline |
| Highway Holdings |
| Old Republic Interna |
Highway Holdings and Old Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Old Republic
The main advantage of trading using opposite Highway Holdings and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Old Republic 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 Old Republic will offset losses from the drop in Old Republic's long position.| Highway Holdings vs. Deswell Industries | Highway Holdings vs. SCOR PK | Highway Holdings vs. HUMANA INC | Highway Holdings vs. Aquagold International |
| Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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