Correlation Between Highway Holdings and Gladstone Land

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

Diversification Opportunities for Highway Holdings and Gladstone Land

-0.33

Correlation Coefficient

Highway Holdings  Gladstone Land

Very good diversification

The 3 months correlation between Highway and Gladstone is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Gladstone Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Land 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 Gladstone Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Land has no effect on the direction of Highway Holdings i.e., Highway Holdings and Gladstone Land go up and down completely randomly.

Pair Corralation between Highway Holdings and Gladstone Land

Given the investment horizon of 90 days Highway Holdings Limited is expected to generate 4.69 times more return on investment than Gladstone Land. However, Highway Holdings is 4.69 times more volatile than Gladstone Land. It trades about 0.02 of its potential returns per unit of risk. Gladstone Land is currently generating about -0.05 per unit of risk. If you would invest  191.00  in Highway Holdings Limited on October 21, 2024 and sell it today you would earn a total of  1.00  from holding Highway Holdings Limited or generate 0.52% return on investment over 90 days.

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

Highway Holdings Limited  vs.  Gladstone Land

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 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.

Gladstone Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gladstone Land has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Gladstone Land is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Highway Holdings and Gladstone Land

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

The idea behind Highway Holdings Limited and Gladstone Land 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.