Correlation Between KEYBANK and Highway Holdings

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

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

Diversification Opportunities for KEYBANK and Highway Holdings

-0.01

Correlation Coefficient

KEYBANK  Highway Holdings

Good diversification

The 3 months correlation between KEYBANK and Highway is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding KEYBANK NATL ASSN and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and KEYBANK 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 KEYBANK NATL ASSN 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 KEYBANK i.e., KEYBANK and Highway Holdings go up and down completely randomly.

Pair Corralation between KEYBANK and Highway Holdings

Assuming the 90 days trading horizon KEYBANK NATL ASSN is expected to under-perform the Highway Holdings. But the bond apears to be less risky and, when comparing its historical volatility, KEYBANK NATL ASSN is 1.48 times less risky than Highway Holdings. The bond trades about -0.25 of its potential returns per unit of risk. The Highway Holdings Limited is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  247.00  in Highway Holdings Limited on October 22, 2024 and sell it today you would lose (55.00) from holding Highway Holdings Limited or give up 22.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.7%
Values	Daily Returns

KEYBANK NATL ASSN  vs.  Highway Holdings Limited

KEYBANK NATL ASSN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYBANK NATL ASSN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for KEYBANK NATL ASSN investors.

Highway Holdings

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with KEYBANK and Highway Holdings

The main advantage of trading using opposite KEYBANK and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEYBANK 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 KEYBANK NATL ASSN 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 Transaction History module to view history of all your transactions and understand their impact on performance.