Correlation Between Highway Holdings and Asure Software

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

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

Diversification Opportunities for Highway Holdings and Asure Software

0.24

Correlation Coefficient

Highway Holdings  Asure Software

Modest diversification

The 3 months correlation between Highway and Asure is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Asure Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asure Software and Highway Holdings 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 Highway Holdings Limited are associated (or correlated) with Asure Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asure Software has no effect on the direction of Highway Holdings i.e., Highway Holdings and Asure Software go up and down completely randomly.

Pair Corralation between Highway Holdings and Asure Software

Given the investment horizon of 90 days Highway Holdings is expected to generate 2.4 times less return on investment than Asure Software. But when comparing it to its historical volatility, Highway Holdings Limited is 1.2 times less risky than Asure Software. It trades about 0.01 of its potential returns per unit of risk. Asure Software is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  832.00  in Asure Software on September 24, 2024 and sell it today you would earn a total of  80.00  from holding Asure Software or generate 9.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.31%
Values	Daily Returns

Highway Holdings Limited  vs.  Asure Software

Highway Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highway Holdings Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Highway Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Asure Software

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asure Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Asure Software is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Highway Holdings and Asure Software

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

The idea behind Highway Holdings Limited and Asure Software 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.