Correlation Between Highway Holdings and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Western Acquisition 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 Western Acquisition 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 Western Acquisition Ventures, you can compare the effects of market volatilities on Highway Holdings and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Western Acquisition.
Diversification Opportunities for Highway Holdings and Western Acquisition
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Highway and Western is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Highway Holdings i.e., Highway Holdings and Western Acquisition go up and down completely randomly.
Pair Corralation between Highway Holdings and Western Acquisition
Given the investment horizon of 90 days Highway Holdings is expected to generate 2.27 times less return on investment than Western Acquisition. In addition to that, Highway Holdings is 1.79 times more volatile than Western Acquisition Ventures. It trades about 0.01 of its total potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.03 per unit of volatility. If you would invest 1,025 in Western Acquisition Ventures on October 23, 2024 and sell it today you would earn a total of 174.00 from holding Western Acquisition Ventures or generate 16.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Highway Holdings Limited vs. Western Acquisition Ventures
Performance |
| Timeline |
| Highway Holdings |
| Western Acquisition |
Highway Holdings and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Western Acquisition
The main advantage of trading using opposite Highway Holdings and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition'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 |
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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