Correlation Between Highway Holdings and Knife River
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Knife River 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 Knife River 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 Knife River, you can compare the effects of market volatilities on Highway Holdings and Knife River 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 Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Knife River.
Diversification Opportunities for Highway Holdings and Knife River
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Highway and Knife is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River 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 Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of Highway Holdings i.e., Highway Holdings and Knife River go up and down completely randomly.
Pair Corralation between Highway Holdings and Knife River
Given the investment horizon of 90 days Highway Holdings Limited is expected to under-perform the Knife River. But the stock apears to be less risky and, when comparing its historical volatility, Highway Holdings Limited is 2.01 times less risky than Knife River. The stock trades about -0.04 of its potential returns per unit of risk. The Knife River is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 10,406 in Knife River on September 24, 2024 and sell it today you would lose (143.00) from holding Knife River or give up 1.37% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Highway Holdings Limited vs. Knife River
Performance |
Timeline |
Highway Holdings |
Knife River |
Highway Holdings and Knife River Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Highway Holdings and Knife River
The main advantage of trading using opposite Highway Holdings and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Knife River 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 Knife River will offset losses from the drop in Knife River's long position.Highway Holdings vs. Insteel Industries | Highway Holdings vs. Carpenter Technology | Highway Holdings vs. Mueller Industries | Highway Holdings vs. Northwest Pipe |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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