Correlation Between Highway Holdings and Consilium Acquisition

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

Diversification Opportunities for Highway Holdings and Consilium Acquisition

-0.27

Correlation Coefficient

Highway Holdings  Consilium Acquisition

Very good diversification

The 3 months correlation between Highway and Consilium is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Consilium Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consilium Acquisition 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 Consilium Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consilium Acquisition has no effect on the direction of Highway Holdings i.e., Highway Holdings and Consilium Acquisition go up and down completely randomly.

Pair Corralation between Highway Holdings and Consilium Acquisition

Given the investment horizon of 90 days Highway Holdings Limited is expected to generate 0.28 times more return on investment than Consilium Acquisition. However, Highway Holdings Limited is 3.56 times less risky than Consilium Acquisition. It trades about 0.01 of its potential returns per unit of risk. Consilium Acquisition I is currently generating about -0.12 per unit of risk. If you would invest  194.00  in Highway Holdings Limited on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Highway Holdings Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Highway Holdings Limited  vs.  Consilium Acquisition I

Highway Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Highway Holdings Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Highway Holdings is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Consilium Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consilium Acquisition I has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Highway Holdings and Consilium Acquisition

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

The idea behind Highway Holdings Limited and Consilium Acquisition I 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.