Correlation Between Procter Gamble and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both Procter Gamble 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 Procter Gamble and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Highway Holdings Limited, you can compare the effects of market volatilities on Procter Gamble 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 Procter Gamble with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Highway Holdings.
Diversification Opportunities for Procter Gamble and Highway Holdings
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and Highway is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and Procter Gamble 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 Procter Gamble 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 Procter Gamble i.e., Procter Gamble and Highway Holdings go up and down completely randomly.
Pair Corralation between Procter Gamble and Highway Holdings
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 4.13 times less return on investment than Highway Holdings. But when comparing it to its historical volatility, Procter Gamble is 4.72 times less risky than Highway Holdings. It trades about 0.06 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 181.00 in Highway Holdings Limited on September 3, 2024 and sell it today you would earn a total of 17.00 from holding Highway Holdings Limited or generate 9.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Highway Holdings Limited
Performance |
| Timeline |
| Procter Gamble |
| Highway Holdings |
Procter Gamble and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Highway Holdings
The main advantage of trading using opposite Procter Gamble and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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.| Procter Gamble vs. Highway Holdings Limited | Procter Gamble vs. QCR Holdings | Procter Gamble vs. Partner Communications | Procter Gamble vs. Acumen Pharmaceuticals |
| Highway Holdings vs. Deswell Industries | Highway Holdings vs. SCOR PK | Highway Holdings vs. HUMANA INC | Highway Holdings vs. Aquagold International |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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