Correlation Between Highway Holdings and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Perseus Mining 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 Perseus Mining 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 Perseus Mining Limited, you can compare the effects of market volatilities on Highway Holdings and Perseus Mining 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 Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Perseus Mining.
Diversification Opportunities for Highway Holdings and Perseus Mining
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highway and Perseus is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining 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 Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of Highway Holdings i.e., Highway Holdings and Perseus Mining go up and down completely randomly.
Pair Corralation between Highway Holdings and Perseus Mining
Given the investment horizon of 90 days Highway Holdings Limited is expected to under-perform the Perseus Mining. In addition to that, Highway Holdings is 1.01 times more volatile than Perseus Mining Limited. It trades about -0.01 of its total potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.04 per unit of volatility. If you would invest 151.00 in Perseus Mining Limited on August 30, 2024 and sell it today you would earn a total of 16.00 from holding Perseus Mining Limited or generate 10.6% 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. Perseus Mining Limited
Performance |
| Timeline |
| Highway Holdings |
| Perseus Mining |
Highway Holdings and Perseus Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Perseus Mining
The main advantage of trading using opposite Highway Holdings and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Perseus Mining 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 Perseus Mining will offset losses from the drop in Perseus Mining's long position.| Highway Holdings vs. Northwest Pipe | Highway Holdings vs. Haynes International | Highway Holdings vs. Mayville Engineering Co | Highway Holdings vs. Ryerson Holding Corp |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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