Correlation Between Highway Holdings and Bill

Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Bill 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 Bill 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 Bill Com Holdings, you can compare the effects of market volatilities on Highway Holdings and Bill 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 Bill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Bill.

Diversification Opportunities for Highway Holdings and Bill

0.09

Correlation Coefficient

Highway Holdings  Bill

Significant diversification

The 3 months correlation between Highway and Bill is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Bill Com Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bill Com Holdings 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 Bill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bill Com Holdings has no effect on the direction of Highway Holdings i.e., Highway Holdings and Bill go up and down completely randomly.

Pair Corralation between Highway Holdings and Bill

Given the investment horizon of 90 days Highway Holdings is expected to generate 1.59 times less return on investment than Bill. But when comparing it to its historical volatility, Highway Holdings Limited is 1.29 times less risky than Bill. It trades about 0.01 of its potential returns per unit of risk. Bill Com Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  9,698  in Bill Com Holdings on September 26, 2024 and sell it today you would lose (994.00) from holding Bill Com Holdings or give up 10.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Highway Holdings Limited  vs.  Bill Com Holdings

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.

Bill Com Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bill Com Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Bill disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Highway Holdings and Bill

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

The idea behind Highway Holdings Limited and Bill Com 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.