Correlation Between Highway Holdings and Everspin Technologies

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

Diversification Opportunities for Highway Holdings and Everspin Technologies

-0.01

Correlation Coefficient

Highway Holdings  Everspin Technologies

Good diversification

The 3 months correlation between Highway and Everspin is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies 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 Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of Highway Holdings i.e., Highway Holdings and Everspin Technologies go up and down completely randomly.

Pair Corralation between Highway Holdings and Everspin Technologies

Given the investment horizon of 90 days Highway Holdings is expected to generate 2.03 times less return on investment than Everspin Technologies. In addition to that, Highway Holdings is 1.06 times more volatile than Everspin Technologies. It trades about 0.01 of its total potential returns per unit of risk. Everspin Technologies is currently generating about 0.01 per unit of volatility. If you would invest  640.00  in Everspin Technologies on October 3, 2024 and sell it today you would earn a total of  8.00  from holding Everspin Technologies or generate 1.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Highway Holdings Limited  vs.  Everspin Technologies

Highway Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Highway Holdings Limited are ranked lower than 3 (%) 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 February 2025.

Everspin Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Everspin Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Everspin Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Highway Holdings and Everspin Technologies

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

The idea behind Highway Holdings Limited and Everspin Technologies 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.