Correlation Between Highway Holdings and DIeteren
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and DIeteren 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 DIeteren 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 DIeteren NV ADR, you can compare the effects of market volatilities on Highway Holdings and DIeteren 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 DIeteren. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and DIeteren.
Diversification Opportunities for Highway Holdings and DIeteren
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Highway and DIeteren is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and DIeteren NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIeteren NV ADR 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 DIeteren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIeteren NV ADR has no effect on the direction of Highway Holdings i.e., Highway Holdings and DIeteren go up and down completely randomly.
Pair Corralation between Highway Holdings and DIeteren
Given the investment horizon of 90 days Highway Holdings is expected to generate 3.52 times less return on investment than DIeteren. In addition to that, Highway Holdings is 1.09 times more volatile than DIeteren NV ADR. It trades about 0.02 of its total potential returns per unit of risk. DIeteren NV ADR is currently generating about 0.06 per unit of volatility. If you would invest 8,410 in DIeteren NV ADR on September 15, 2024 and sell it today you would earn a total of 2,333 from holding DIeteren NV ADR or generate 27.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.28% |
| Values | Daily Returns |
Highway Holdings Limited vs. DIeteren NV ADR
Performance |
| Timeline |
| Highway Holdings |
| DIeteren NV ADR |
Highway Holdings and DIeteren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and DIeteren
The main advantage of trading using opposite Highway Holdings and DIeteren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, DIeteren 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 DIeteren will offset losses from the drop in DIeteren'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 |
| DIeteren vs. Highway Holdings Limited | DIeteren vs. Keurig Dr Pepper | DIeteren vs. Enersys | DIeteren vs. Sandstorm Gold Ltd |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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