Correlation Between Higher Way and GCS Holdings

Can any of the company-specific risk be diversified away by investing in both Higher Way and GCS 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 Higher Way and GCS Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Higher Way Electronic and GCS Holdings, you can compare the effects of market volatilities on Higher Way and GCS 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 Higher Way with a short position of GCS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Higher Way and GCS Holdings.

Diversification Opportunities for Higher Way and GCS Holdings

0.03

Correlation Coefficient

Higher Way  GCS Holdings

Significant diversification

The 3 months correlation between Higher and GCS is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Higher Way Electronic and GCS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCS Holdings and Higher Way 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 Higher Way Electronic are associated (or correlated) with GCS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCS Holdings has no effect on the direction of Higher Way i.e., Higher Way and GCS Holdings go up and down completely randomly.

Pair Corralation between Higher Way and GCS Holdings

Assuming the 90 days trading horizon Higher Way Electronic is expected to under-perform the GCS Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Higher Way Electronic is 2.42 times less risky than GCS Holdings. The stock trades about -0.1 of its potential returns per unit of risk. The GCS Holdings is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  13,450  in GCS Holdings on December 21, 2024 and sell it today you would lose (2,050) from holding GCS Holdings or give up 15.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Higher Way Electronic  vs.  GCS Holdings

Higher Way Electronic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Higher Way Electronic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

GCS Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days GCS Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Higher Way and GCS Holdings

The main advantage of trading using opposite Higher Way and GCS Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Higher Way position performs unexpectedly, GCS 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 GCS Holdings will offset losses from the drop in GCS Holdings' long position.

The idea behind Higher Way Electronic and GCS Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.