Correlation Between Highway Holdings and Comcast Corp

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

Diversification Opportunities for Highway Holdings and Comcast Corp

0.29

Correlation Coefficient

Highway Holdings  Comcast Corp

Modest diversification

The 3 months correlation between Highway and Comcast is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Comcast Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comcast Corp 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 Comcast Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comcast Corp has no effect on the direction of Highway Holdings i.e., Highway Holdings and Comcast Corp go up and down completely randomly.

Pair Corralation between Highway Holdings and Comcast Corp

Given the investment horizon of 90 days Highway Holdings Limited is expected to generate 2.42 times more return on investment than Comcast Corp. However, Highway Holdings is 2.42 times more volatile than Comcast Corp. It trades about 0.05 of its potential returns per unit of risk. Comcast Corp is currently generating about 0.02 per unit of risk. If you would invest  180.00  in Highway Holdings Limited on September 12, 2024 and sell it today you would earn a total of  16.00  from holding Highway Holdings Limited or generate 8.89% return on investment over 90 days.

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

Highway Holdings Limited  vs.  Comcast Corp

Highway Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Highway Holdings Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Highway Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Comcast Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Comcast Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Comcast Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Highway Holdings and Comcast Corp

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

The idea behind Highway Holdings Limited and Comcast Corp 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.