Correlation Between Highway Holdings and 26442EAG5

Can any of the company-specific risk be diversified away by investing in both Highway Holdings and 26442EAG5 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 26442EAG5 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 DUKE ENERGY OHIO, you can compare the effects of market volatilities on Highway Holdings and 26442EAG5 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 26442EAG5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and 26442EAG5.

Diversification Opportunities for Highway Holdings and 26442EAG5

0.17

Correlation Coefficient

Highway Holdings  26442EAG5

Average diversification

The 3 months correlation between Highway and 26442EAG5 is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and DUKE ENERGY OHIO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY OHIO 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 26442EAG5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY OHIO has no effect on the direction of Highway Holdings i.e., Highway Holdings and 26442EAG5 go up and down completely randomly.

Pair Corralation between Highway Holdings and 26442EAG5

Given the investment horizon of 90 days Highway Holdings is expected to generate 2.57 times less return on investment than 26442EAG5. But when comparing it to its historical volatility, Highway Holdings Limited is 1.34 times less risky than 26442EAG5. It trades about 0.03 of its potential returns per unit of risk. DUKE ENERGY OHIO is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,303  in DUKE ENERGY OHIO on October 25, 2024 and sell it today you would earn a total of  359.00  from holding DUKE ENERGY OHIO or generate 4.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	71.67%
Values	Daily Returns

Highway Holdings Limited  vs.  DUKE ENERGY OHIO

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 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.

DUKE ENERGY OHIO

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE ENERGY OHIO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, 26442EAG5 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Highway Holdings and 26442EAG5

The main advantage of trading using opposite Highway Holdings and 26442EAG5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, 26442EAG5 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 26442EAG5 will offset losses from the drop in 26442EAG5's long position.

The idea behind Highway Holdings Limited and DUKE ENERGY OHIO 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.