Correlation Between DIeteren and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both DIeteren 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 DIeteren and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DIeteren NV ADR and Highway Holdings Limited, you can compare the effects of market volatilities on DIeteren 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 DIeteren with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIeteren and Highway Holdings.
Diversification Opportunities for DIeteren and Highway Holdings
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DIeteren and Highway is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding DIeteren NV ADR and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and DIeteren 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 DIeteren NV ADR 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 DIeteren i.e., DIeteren and Highway Holdings go up and down completely randomly.
Pair Corralation between DIeteren and Highway Holdings
Assuming the 90 days horizon DIeteren NV ADR is expected to generate 1.48 times more return on investment than Highway Holdings. However, DIeteren is 1.48 times more volatile than Highway Holdings Limited. It trades about 0.03 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about -0.18 per unit of risk. If you would invest 10,651 in DIeteren NV ADR on September 15, 2024 and sell it today you would earn a total of 92.00 from holding DIeteren NV ADR or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DIeteren NV ADR vs. Highway Holdings Limited
Performance |
| Timeline |
| DIeteren NV ADR |
| Highway Holdings |
DIeteren and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DIeteren and Highway Holdings
The main advantage of trading using opposite DIeteren and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DIeteren 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.| DIeteren vs. Highway Holdings Limited | DIeteren vs. Keurig Dr Pepper | DIeteren vs. Enersys | DIeteren vs. Sandstorm Gold Ltd |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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