Correlation Between NH Foods and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both NH Foods and Highway Holdings 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 NH Foods and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Foods Ltd and Highway Holdings Limited, you can compare the effects of market volatilities on NH Foods and Highway Holdings 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 NH Foods with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Foods and Highway Holdings.
Diversification Opportunities for NH Foods and Highway Holdings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NIPMY and Highway is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NH Foods Ltd and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and NH Foods 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 NH Foods Ltd are associated (or correlated) with Highway Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highway Holdings has no effect on the direction of NH Foods i.e., NH Foods and Highway Holdings go up and down completely randomly.
Pair Corralation between NH Foods and Highway Holdings
Assuming the 90 days horizon NH Foods Ltd is expected to generate 0.12 times more return on investment than Highway Holdings. However, NH Foods Ltd is 8.27 times less risky than Highway Holdings. It trades about 0.09 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about -0.01 per unit of risk. If you would invest 1,625 in NH Foods Ltd on August 28, 2024 and sell it today you would earn a total of 75.00 from holding NH Foods Ltd or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH Foods Ltd vs. Highway Holdings Limited
Performance |
| Timeline |
| NH Foods |
| Highway Holdings |
NH Foods and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Foods and Highway Holdings
The main advantage of trading using opposite NH Foods and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Foods position performs unexpectedly, Highway Holdings 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 Highway Holdings will offset losses from the drop in Highway Holdings' long position.| NH Foods vs. Artisan Consumer Goods | NH Foods vs. The A2 Milk | NH Foods vs. BioAdaptives | NH Foods vs. General Mills |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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