Correlation Between Highway Holdings and Starbucks
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Starbucks 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 Starbucks 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 Starbucks, you can compare the effects of market volatilities on Highway Holdings and Starbucks 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 Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Starbucks.
Diversification Opportunities for Highway Holdings and Starbucks
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Highway and Starbucks is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Highway Holdings i.e., Highway Holdings and Starbucks go up and down completely randomly.
Pair Corralation between Highway Holdings and Starbucks
Given the investment horizon of 90 days Highway Holdings is expected to generate 13.48 times less return on investment than Starbucks. In addition to that, Highway Holdings is 1.25 times more volatile than Starbucks. It trades about 0.01 of its total potential returns per unit of risk. Starbucks is currently generating about 0.11 per unit of volatility. If you would invest 7,147 in Starbucks on September 3, 2024 and sell it today you would earn a total of 3,099 from holding Starbucks or generate 43.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.32% |
| Values | Daily Returns |
Highway Holdings Limited vs. Starbucks
Performance |
| Timeline |
| Highway Holdings |
| Starbucks |
Highway Holdings and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Starbucks
The main advantage of trading using opposite Highway Holdings and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.| Highway Holdings vs. Deswell Industries | Highway Holdings vs. SCOR PK | Highway Holdings vs. HUMANA INC | Highway Holdings vs. Aquagold International |
| Starbucks vs. Highway Holdings Limited | Starbucks vs. QCR Holdings | Starbucks vs. Partner Communications | Starbucks vs. Acumen Pharmaceuticals |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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