Correlation Between Highway Holdings and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and PennantPark Investment 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 PennantPark Investment 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 PennantPark Investment, you can compare the effects of market volatilities on Highway Holdings and PennantPark Investment 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 PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and PennantPark Investment.
Diversification Opportunities for Highway Holdings and PennantPark Investment
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highway and PennantPark is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment 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 PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of Highway Holdings i.e., Highway Holdings and PennantPark Investment go up and down completely randomly.
Pair Corralation between Highway Holdings and PennantPark Investment
Given the investment horizon of 90 days Highway Holdings Limited is expected to generate 0.6 times more return on investment than PennantPark Investment. However, Highway Holdings Limited is 1.66 times less risky than PennantPark Investment. It trades about 0.03 of its potential returns per unit of risk. PennantPark Investment is currently generating about -0.03 per unit of risk. If you would invest 190.00 in Highway Holdings Limited on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Highway Holdings Limited or generate 0.53% 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. PennantPark Investment
Performance |
| Timeline |
| Highway Holdings |
| PennantPark Investment |
Highway Holdings and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and PennantPark Investment
The main advantage of trading using opposite Highway Holdings and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment'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 |
| PennantPark Investment vs. Ares Capital | PennantPark Investment vs. Hercules Capital | PennantPark Investment vs. Main Street Capital |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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