Correlation Between Highway Holdings and Saratoga Investment
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Saratoga 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 Saratoga 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 Saratoga Investment Corp, you can compare the effects of market volatilities on Highway Holdings and Saratoga 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 Saratoga Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Saratoga Investment.
Diversification Opportunities for Highway Holdings and Saratoga Investment
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Highway and Saratoga is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Saratoga Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saratoga Investment Corp 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 Saratoga Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saratoga Investment Corp has no effect on the direction of Highway Holdings i.e., Highway Holdings and Saratoga Investment go up and down completely randomly.
Pair Corralation between Highway Holdings and Saratoga Investment
Given the investment horizon of 90 days Highway Holdings is expected to generate 1.54 times less return on investment than Saratoga Investment. In addition to that, Highway Holdings is 6.31 times more volatile than Saratoga Investment Corp. It trades about 0.01 of its total potential returns per unit of risk. Saratoga Investment Corp is currently generating about 0.08 per unit of volatility. If you would invest 2,037 in Saratoga Investment Corp on September 2, 2024 and sell it today you would earn a total of 413.00 from holding Saratoga Investment Corp or generate 20.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Highway Holdings Limited vs. Saratoga Investment Corp
Performance |
| Timeline |
| Highway Holdings |
| Saratoga Investment Corp |
Highway Holdings and Saratoga Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Saratoga Investment
The main advantage of trading using opposite Highway Holdings and Saratoga Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Saratoga 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 Saratoga Investment will offset losses from the drop in Saratoga 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 |
| Saratoga Investment vs. Diamond Hill Investment | Saratoga Investment vs. AllianceBernstein Holding LP | Saratoga Investment vs. Associated Capital Group | Saratoga Investment vs. Blackstone Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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