Correlation Between Highway Holdings and Teradyne
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Teradyne 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 Teradyne 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 Teradyne, you can compare the effects of market volatilities on Highway Holdings and Teradyne 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 Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Teradyne.
Diversification Opportunities for Highway Holdings and Teradyne
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Highway and Teradyne is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne 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 Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Highway Holdings i.e., Highway Holdings and Teradyne go up and down completely randomly.
Pair Corralation between Highway Holdings and Teradyne
Given the investment horizon of 90 days Highway Holdings Limited is expected to generate 0.51 times more return on investment than Teradyne. However, Highway Holdings Limited is 1.96 times less risky than Teradyne. It trades about -0.22 of its potential returns per unit of risk. Teradyne is currently generating about -0.14 per unit of risk. If you would invest 201.00 in Highway Holdings Limited on November 2, 2024 and sell it today you would lose (14.00) from holding Highway Holdings Limited or give up 6.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. Teradyne
Performance |
| Timeline |
| Highway Holdings |
| Teradyne |
Highway Holdings and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Teradyne
The main advantage of trading using opposite Highway Holdings and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Teradyne 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 Teradyne will offset losses from the drop in Teradyne'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 |
| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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