Correlation Between Highway Holdings and Regency Centers

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

Diversification Opportunities for Highway Holdings and Regency Centers

-0.1

Correlation Coefficient

Highway Holdings  Regency Centers

Good diversification

The 3 months correlation between Highway and Regency is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Regency Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regency Centers 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 Regency Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regency Centers has no effect on the direction of Highway Holdings i.e., Highway Holdings and Regency Centers go up and down completely randomly.

Pair Corralation between Highway Holdings and Regency Centers

Given the investment horizon of 90 days Highway Holdings is expected to generate 1.06 times less return on investment than Regency Centers. In addition to that, Highway Holdings is 2.41 times more volatile than Regency Centers. It trades about 0.01 of its total potential returns per unit of risk. Regency Centers is currently generating about 0.03 per unit of volatility. If you would invest  2,073  in Regency Centers on October 10, 2024 and sell it today you would earn a total of  302.00  from holding Regency Centers or generate 14.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Highway Holdings Limited  vs.  Regency Centers

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 displayed solid returns over the last few months and may actually be approaching a breakup point.

Regency Centers

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Highway Holdings and Regency Centers

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

The idea behind Highway Holdings Limited and Regency Centers 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.