Correlation Between Highway Holdings and Chipotle Mexican
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Chipotle Mexican 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 Chipotle Mexican 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 Chipotle Mexican Grill, you can compare the effects of market volatilities on Highway Holdings and Chipotle Mexican 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 Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Chipotle Mexican.
Diversification Opportunities for Highway Holdings and Chipotle Mexican
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Highway and Chipotle is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Chipotle Mexican Grill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chipotle Mexican Grill 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 Chipotle Mexican. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chipotle Mexican Grill has no effect on the direction of Highway Holdings i.e., Highway Holdings and Chipotle Mexican go up and down completely randomly.
Pair Corralation between Highway Holdings and Chipotle Mexican
Given the investment horizon of 90 days Highway Holdings is expected to generate 1.05 times less return on investment than Chipotle Mexican. In addition to that, Highway Holdings is 2.36 times more volatile than Chipotle Mexican Grill. It trades about 0.05 of its total potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.12 per unit of volatility. If you would invest 5,635 in Chipotle Mexican Grill on September 12, 2024 and sell it today you would earn a total of 823.00 from holding Chipotle Mexican Grill or generate 14.61% 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. Chipotle Mexican Grill
Performance |
Timeline |
Highway Holdings |
Chipotle Mexican Grill |
Highway Holdings and Chipotle Mexican Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Highway Holdings and Chipotle Mexican
The main advantage of trading using opposite Highway Holdings and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Chipotle Mexican 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 Chipotle Mexican will offset losses from the drop in Chipotle Mexican's long position.Highway Holdings vs. Deswell Industries | Highway Holdings vs. Euro Tech Holdings | Highway Holdings vs. China Natural Resources | Highway Holdings vs. Arts Way Manufacturing Co |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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