Correlation Between Restaurant Brands and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both Restaurant Brands 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 Restaurant Brands and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Restaurant Brands International and Highway Holdings Limited, you can compare the effects of market volatilities on Restaurant Brands 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 Restaurant Brands with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Restaurant Brands and Highway Holdings.
Diversification Opportunities for Restaurant Brands and Highway Holdings
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Restaurant and Highway is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Restaurant Brands Internationa and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and Restaurant Brands 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 Restaurant Brands International 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 Restaurant Brands i.e., Restaurant Brands and Highway Holdings go up and down completely randomly.
Pair Corralation between Restaurant Brands and Highway Holdings
Considering the 90-day investment horizon Restaurant Brands International is expected to generate 0.54 times more return on investment than Highway Holdings. However, Restaurant Brands International is 1.84 times less risky than Highway Holdings. It trades about 0.04 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.02 per unit of risk. If you would invest 6,190 in Restaurant Brands International on September 4, 2024 and sell it today you would earn a total of 782.00 from holding Restaurant Brands International or generate 12.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.31% |
| Values | Daily Returns |
Restaurant Brands Internationa vs. Highway Holdings Limited
Performance |
| Timeline |
| Restaurant Brands |
| Highway Holdings |
Restaurant Brands and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Restaurant Brands and Highway Holdings
The main advantage of trading using opposite Restaurant Brands and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Restaurant Brands 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.| Restaurant Brands vs. Hyatt Hotels | Restaurant Brands vs. Smart Share Global | Restaurant Brands vs. Sweetgreen | Restaurant Brands vs. Wyndham Hotels Resorts |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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