Correlation Between Highway Holdings and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Skechers USA 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 Skechers USA 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 Skechers USA, you can compare the effects of market volatilities on Highway Holdings and Skechers USA 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 Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Skechers USA.
Diversification Opportunities for Highway Holdings and Skechers USA
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Highway and Skechers is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA 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 Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Highway Holdings i.e., Highway Holdings and Skechers USA go up and down completely randomly.
Pair Corralation between Highway Holdings and Skechers USA
Given the investment horizon of 90 days Highway Holdings Limited is expected to generate 0.51 times more return on investment than Skechers USA. However, Highway Holdings Limited is 1.97 times less risky than Skechers USA. It trades about -0.05 of its potential returns per unit of risk. Skechers USA is currently generating about -0.03 per unit of risk. If you would invest 190.00 in Highway Holdings Limited on December 2, 2024 and sell it today you would lose (8.00) from holding Highway Holdings Limited or give up 4.21% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Highway Holdings Limited vs. Skechers USA
Performance |
Timeline |
Highway Holdings |
Skechers USA |
Highway Holdings and Skechers USA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Highway Holdings and Skechers USA
The main advantage of trading using opposite Highway Holdings and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Skechers USA 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 Skechers USA will offset losses from the drop in Skechers USA'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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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