Correlation Between ServiceNow and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both ServiceNow 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 ServiceNow and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ServiceNow and Highway Holdings Limited, you can compare the effects of market volatilities on ServiceNow 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 ServiceNow with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ServiceNow and Highway Holdings.
Diversification Opportunities for ServiceNow and Highway Holdings
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between ServiceNow and Highway is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and ServiceNow 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 ServiceNow 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 ServiceNow i.e., ServiceNow and Highway Holdings go up and down completely randomly.
Pair Corralation between ServiceNow and Highway Holdings
Considering the 90-day investment horizon ServiceNow is expected to under-perform the Highway Holdings. But the stock apears to be less risky and, when comparing its historical volatility, ServiceNow is 1.07 times less risky than Highway Holdings. The stock trades about -0.07 of its potential returns per unit of risk. The Highway Holdings Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 190.00 in Highway Holdings Limited on October 21, 2024 and sell it today you would earn a total of 2.00 from holding Highway Holdings Limited or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ServiceNow vs. Highway Holdings Limited
Performance |
| Timeline |
| ServiceNow |
| Highway Holdings |
ServiceNow and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ServiceNow and Highway Holdings
The main advantage of trading using opposite ServiceNow and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ServiceNow 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.| ServiceNow vs. Autodesk | ServiceNow vs. Intuit Inc | ServiceNow vs. Zoom Video Communications | ServiceNow vs. Snowflake |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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