Correlation Between Highway Holdings and Stagwell

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

Diversification Opportunities for Highway Holdings and Stagwell

-0.26

Correlation Coefficient

Highway Holdings  Stagwell

Very good diversification

The 3 months correlation between Highway and Stagwell is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Highway Holdings i.e., Highway Holdings and Stagwell go up and down completely randomly.

Pair Corralation between Highway Holdings and Stagwell

Given the investment horizon of 90 days Highway Holdings is expected to generate 1.22 times less return on investment than Stagwell. But when comparing it to its historical volatility, Highway Holdings Limited is 1.24 times less risky than Stagwell. It trades about 0.01 of its potential returns per unit of risk. Stagwell is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  689.00  in Stagwell on October 12, 2024 and sell it today you would lose (95.00) from holding Stagwell or give up 13.79% of portfolio value over 90 days.

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

Highway Holdings Limited  vs.  Stagwell

Highway Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highway Holdings Limited are ranked lower than 2 (%) 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.

Stagwell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Highway Holdings and Stagwell

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

The idea behind Highway Holdings Limited and Stagwell 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..