Correlation Between Highway Holdings and RCI Hospitality
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and RCI Hospitality 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 RCI Hospitality 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 RCI Hospitality Holdings, you can compare the effects of market volatilities on Highway Holdings and RCI Hospitality 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 RCI Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and RCI Hospitality.
Diversification Opportunities for Highway Holdings and RCI Hospitality
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Highway and RCI is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and RCI Hospitality Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCI Hospitality Holdings 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 RCI Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCI Hospitality Holdings has no effect on the direction of Highway Holdings i.e., Highway Holdings and RCI Hospitality go up and down completely randomly.
Pair Corralation between Highway Holdings and RCI Hospitality
Given the investment horizon of 90 days Highway Holdings is expected to generate 4.61 times less return on investment than RCI Hospitality. But when comparing it to its historical volatility, Highway Holdings Limited is 1.37 times less risky than RCI Hospitality. It trades about 0.03 of its potential returns per unit of risk. RCI Hospitality Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,067 in RCI Hospitality Holdings on September 12, 2024 and sell it today you would earn a total of 142.00 from holding RCI Hospitality Holdings or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. RCI Hospitality Holdings
Performance |
| Timeline |
| Highway Holdings |
| RCI Hospitality Holdings |
Highway Holdings and RCI Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and RCI Hospitality
The main advantage of trading using opposite Highway Holdings and RCI Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, RCI Hospitality 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 RCI Hospitality will offset losses from the drop in RCI Hospitality'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 |
| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |