Correlation Between JBDI Holdings and Highway Holdings

Can any of the company-specific risk be diversified away by investing in both JBDI Holdings and Highway Holdings 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 JBDI Holdings and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JBDI Holdings Limited and Highway Holdings Limited, you can compare the effects of market volatilities on JBDI Holdings and Highway Holdings 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 JBDI Holdings with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of JBDI Holdings and Highway Holdings.

Diversification Opportunities for JBDI Holdings and Highway Holdings

0.27

Correlation Coefficient

JBDI Holdings  Highway Holdings

Modest diversification

The 3 months correlation between JBDI and Highway is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding JBDI Holdings Limited and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and JBDI 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 JBDI Holdings Limited are associated (or correlated) with Highway Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highway Holdings has no effect on the direction of JBDI Holdings i.e., JBDI Holdings and Highway Holdings go up and down completely randomly.

Pair Corralation between JBDI Holdings and Highway Holdings

Given the investment horizon of 90 days JBDI Holdings Limited is expected to generate 4.15 times more return on investment than Highway Holdings. However, JBDI Holdings is 4.15 times more volatile than Highway Holdings Limited. It trades about 0.03 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about -0.02 per unit of risk. If you would invest  58.00  in JBDI Holdings Limited on December 20, 2024 and sell it today you would earn a total of  0.00  from holding JBDI Holdings Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

JBDI Holdings Limited  vs.  Highway Holdings Limited

JBDI Holdings Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JBDI Holdings Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, JBDI Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Highway Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Highway Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with JBDI Holdings and Highway Holdings

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

The idea behind JBDI Holdings Limited and Highway Holdings Limited 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.