Correlation Between Highway Holdings and Juniata Valley

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

Diversification Opportunities for Highway Holdings and Juniata Valley

0.1

Correlation Coefficient

Highway Holdings  Juniata Valley

Average diversification

The 3 months correlation between Highway and Juniata is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Juniata Valley Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniata Valley Financial 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 Juniata Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniata Valley Financial has no effect on the direction of Highway Holdings i.e., Highway Holdings and Juniata Valley go up and down completely randomly.

Pair Corralation between Highway Holdings and Juniata Valley

Given the investment horizon of 90 days Highway Holdings is expected to generate 4.13 times less return on investment than Juniata Valley. But when comparing it to its historical volatility, Highway Holdings Limited is 1.76 times less risky than Juniata Valley. It trades about 0.01 of its potential returns per unit of risk. Juniata Valley Financial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,354  in Juniata Valley Financial on October 5, 2024 and sell it today you would lose (52.00) from holding Juniata Valley Financial or give up 3.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.84%
Values	Daily Returns

Highway Holdings Limited  vs.  Juniata Valley Financial

Highway Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Highway Holdings Limited are ranked lower than 4 (%) 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.

Juniata Valley Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Juniata Valley Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Juniata Valley reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Highway Holdings and Juniata Valley

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

The idea behind Highway Holdings Limited and Juniata Valley Financial 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.