Correlation Between NEWMONT and Highway Holdings

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

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

Diversification Opportunities for NEWMONT and Highway Holdings

-0.36

Correlation Coefficient

NEWMONT  Highway Holdings

Very good diversification

The 3 months correlation between NEWMONT and Highway is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding NEWMONT MNG P and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and NEWMONT 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 NEWMONT MNG P 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 NEWMONT i.e., NEWMONT and Highway Holdings go up and down completely randomly.

Pair Corralation between NEWMONT and Highway Holdings

Assuming the 90 days trading horizon NEWMONT MNG P is expected to under-perform the Highway Holdings. But the bond apears to be less risky and, when comparing its historical volatility, NEWMONT MNG P is 1.57 times less risky than Highway Holdings. The bond trades about -0.07 of its potential returns per unit of risk. The Highway Holdings Limited is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  195.00  in Highway Holdings Limited on December 25, 2024 and sell it today you would lose (7.00) from holding Highway Holdings Limited or give up 3.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.75%
Values	Daily Returns

NEWMONT MNG P  vs.  Highway Holdings Limited

NEWMONT MNG P

Risk-Adjusted Performance

Very Weak

Over the last 90 days NEWMONT MNG P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NEWMONT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 NEWMONT and Highway Holdings

The main advantage of trading using opposite NEWMONT and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWMONT 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 NEWMONT MNG P 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.