Correlation Between Highway Holdings and Nexxen International

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

Diversification Opportunities for Highway Holdings and Nexxen International

-0.03

Correlation Coefficient

Highway Holdings  Nexxen International

Good diversification

The 3 months correlation between Highway and Nexxen is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Nexxen International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexxen 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 Nexxen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexxen International has no effect on the direction of Highway Holdings i.e., Highway Holdings and Nexxen International go up and down completely randomly.

Pair Corralation between Highway Holdings and Nexxen International

Given the investment horizon of 90 days Highway Holdings is expected to generate 7.94 times less return on investment than Nexxen International. In addition to that, Highway Holdings is 1.01 times more volatile than Nexxen International. It trades about 0.02 of its total potential returns per unit of risk. Nexxen International is currently generating about 0.12 per unit of volatility. If you would invest  629.00  in Nexxen International on October 18, 2024 and sell it today you would earn a total of  356.00  from holding Nexxen International or generate 56.6% 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.  Nexxen International

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.

Nexxen International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nexxen International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Nexxen International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Highway Holdings and Nexxen International

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

The idea behind Highway Holdings Limited and Nexxen International 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.