Correlation Between Highway Holdings and Enersys

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

Diversification Opportunities for Highway Holdings and Enersys

-0.05

Correlation Coefficient

Highway Holdings  Enersys

Good diversification

The 3 months correlation between Highway and Enersys is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Highway Holdings i.e., Highway Holdings and Enersys go up and down completely randomly.

Pair Corralation between Highway Holdings and Enersys

Given the investment horizon of 90 days Highway Holdings Limited is expected to generate 0.88 times more return on investment than Enersys. However, Highway Holdings Limited is 1.14 times less risky than Enersys. It trades about -0.1 of its potential returns per unit of risk. Enersys is currently generating about -0.17 per unit of risk. If you would invest  195.00  in Highway Holdings Limited on September 23, 2024 and sell it today you would lose (5.00) from holding Highway Holdings Limited or give up 2.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Highway Holdings Limited  vs.  Enersys

Highway Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highway Holdings Limited are ranked lower than 1 (%) 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.

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Enersys is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Highway Holdings and Enersys

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

The idea behind Highway Holdings Limited and Enersys 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.