Correlation Between Highway Holdings and MF International
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and MF International 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 MF International 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 mF International Limited, you can compare the effects of market volatilities on Highway Holdings and MF International 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 MF International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and MF International.
Diversification Opportunities for Highway Holdings and MF International
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highway and MFI is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and mF International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on mF International 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 MF International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of mF International has no effect on the direction of Highway Holdings i.e., Highway Holdings and MF International go up and down completely randomly.
Pair Corralation between Highway Holdings and MF International
Given the investment horizon of 90 days Highway Holdings Limited is expected to under-perform the MF International. But the stock apears to be less risky and, when comparing its historical volatility, Highway Holdings Limited is 9.7 times less risky than MF International. The stock trades about -0.05 of its potential returns per unit of risk. The mF International Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 69.00 in mF International Limited on December 5, 2024 and sell it today you would lose (7.00) from holding mF International Limited or give up 10.14% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Highway Holdings Limited vs. mF International Limited
Performance |
Timeline |
Highway Holdings |
mF International |
Highway Holdings and MF International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Highway Holdings and MF International
The main advantage of trading using opposite Highway Holdings and MF International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, MF International 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 MF International will offset losses from the drop in MF International's long position.Highway Holdings vs. Deswell Industries | Highway Holdings vs. Euro Tech Holdings | Highway Holdings vs. China Natural Resources | Highway Holdings vs. Arts Way Manufacturing Co |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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