Correlation Between Highway Holdings and Volato
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Volato 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 Volato 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 Volato Group, you can compare the effects of market volatilities on Highway Holdings and Volato 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 Volato. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Volato.
Diversification Opportunities for Highway Holdings and Volato
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Highway and Volato is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Volato Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volato Group 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 Volato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volato Group has no effect on the direction of Highway Holdings i.e., Highway Holdings and Volato go up and down completely randomly.
Pair Corralation between Highway Holdings and Volato
Given the investment horizon of 90 days Highway Holdings is expected to generate 42.64 times less return on investment than Volato. But when comparing it to its historical volatility, Highway Holdings Limited is 26.58 times less risky than Volato. It trades about 0.1 of its potential returns per unit of risk. Volato Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Volato Group on September 5, 2024 and sell it today you would earn a total of 14.00 from holding Volato Group or generate 60.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. Volato Group
Performance |
| Timeline |
| Highway Holdings |
| Volato Group |
Highway Holdings and Volato Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Volato
The main advantage of trading using opposite Highway Holdings and Volato positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Volato 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 Volato will offset losses from the drop in Volato'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 |
| Volato vs. AerSale Corp | Volato vs. Flughafen Zrich AG | Volato vs. Aquagold International | Volato vs. Thrivent High Yield |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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