Correlation Between Highway Holdings and Revolve Group
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Revolve Group 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 Revolve Group 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 Revolve Group LLC, you can compare the effects of market volatilities on Highway Holdings and Revolve Group 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 Revolve Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Revolve Group.
Diversification Opportunities for Highway Holdings and Revolve Group
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Highway and Revolve is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Revolve Group LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolve Group LLC 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 Revolve Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolve Group LLC has no effect on the direction of Highway Holdings i.e., Highway Holdings and Revolve Group go up and down completely randomly.
Pair Corralation between Highway Holdings and Revolve Group
Given the investment horizon of 90 days Highway Holdings is expected to generate 10.46 times less return on investment than Revolve Group. But when comparing it to its historical volatility, Highway Holdings Limited is 2.35 times less risky than Revolve Group. It trades about 0.03 of its potential returns per unit of risk. Revolve Group LLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,357 in Revolve Group LLC on September 12, 2024 and sell it today you would earn a total of 210.00 from holding Revolve Group LLC or generate 6.26% 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. Revolve Group LLC
Performance |
| Timeline |
| Highway Holdings |
| Revolve Group LLC |
Highway Holdings and Revolve Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Revolve Group
The main advantage of trading using opposite Highway Holdings and Revolve Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Revolve Group 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 Revolve Group will offset losses from the drop in Revolve Group'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 |
| Revolve Group vs. Hour Loop | Revolve Group vs. Kidpik Corp | Revolve Group vs. MOGU Inc | Revolve Group vs. Jowell Global |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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