Correlation Between WiMi Hologram and Highway Holdings

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

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

Diversification Opportunities for WiMi Hologram and Highway Holdings

0.7

Correlation Coefficient

WiMi Hologram  Highway Holdings

Poor diversification

The 3 months correlation between WiMi and Highway is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding WiMi Hologram Cloud and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and WiMi Hologram 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 WiMi Hologram Cloud 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 WiMi Hologram i.e., WiMi Hologram and Highway Holdings go up and down completely randomly.

Pair Corralation between WiMi Hologram and Highway Holdings

Given the investment horizon of 90 days WiMi Hologram Cloud is expected to generate 9.36 times more return on investment than Highway Holdings. However, WiMi Hologram is 9.36 times more volatile than Highway Holdings Limited. It trades about 0.01 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about -0.03 per unit of risk. If you would invest  129.00  in WiMi Hologram Cloud on December 25, 2024 and sell it today you would lose (47.00) from holding WiMi Hologram Cloud or give up 36.43% of portfolio value over 90 days.

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

WiMi Hologram Cloud  vs.  Highway Holdings Limited

WiMi Hologram Cloud

Risk-Adjusted Performance

Very Weak

Over the last 90 days WiMi Hologram Cloud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak primary indicators, WiMi Hologram may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 WiMi Hologram and Highway Holdings

The main advantage of trading using opposite WiMi Hologram and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiMi Hologram 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 WiMi Hologram Cloud 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.