Correlation Between Highway Holdings and Biocardia
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and Biocardia 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 Biocardia 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 Biocardia, you can compare the effects of market volatilities on Highway Holdings and Biocardia 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 Biocardia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Biocardia.
Diversification Opportunities for Highway Holdings and Biocardia
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Highway and Biocardia is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Biocardia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biocardia 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 Biocardia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biocardia has no effect on the direction of Highway Holdings i.e., Highway Holdings and Biocardia go up and down completely randomly.
Pair Corralation between Highway Holdings and Biocardia
Given the investment horizon of 90 days Highway Holdings Limited is expected to generate 0.91 times more return on investment than Biocardia. However, Highway Holdings Limited is 1.09 times less risky than Biocardia. It trades about 0.03 of its potential returns per unit of risk. Biocardia is currently generating about -0.05 per unit of risk. If you would invest 187.00 in Highway Holdings Limited on September 23, 2024 and sell it today you would earn a total of 3.00 from holding Highway Holdings Limited or generate 1.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Highway Holdings Limited vs. Biocardia
Performance |
Timeline |
Highway Holdings |
Biocardia |
Highway Holdings and Biocardia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Highway Holdings and Biocardia
The main advantage of trading using opposite Highway Holdings and Biocardia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Biocardia 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 Biocardia will offset losses from the drop in Biocardia's long position.Highway Holdings vs. Insteel Industries | Highway Holdings vs. Carpenter Technology | Highway Holdings vs. Mueller Industries | Highway Holdings vs. Northwest Pipe |
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Check out your portfolio center.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.
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