Correlation Between Papa Johns and Highway Holdings

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

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

Diversification Opportunities for Papa Johns and Highway Holdings

0.17

Correlation Coefficient

Papa Johns  Highway Holdings

Average diversification

The 3 months correlation between Papa and Highway is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Papa Johns International and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and Papa Johns 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 Papa Johns International 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 Papa Johns i.e., Papa Johns and Highway Holdings go up and down completely randomly.

Pair Corralation between Papa Johns and Highway Holdings

Given the investment horizon of 90 days Papa Johns International is expected to under-perform the Highway Holdings. In addition to that, Papa Johns is 1.91 times more volatile than Highway Holdings Limited. It trades about -0.22 of its total potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.09 per unit of volatility. If you would invest  191.00  in Highway Holdings Limited on September 4, 2024 and sell it today you would earn a total of  4.00  from holding Highway Holdings Limited or generate 2.09% return on investment over 90 days.

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

Papa Johns International  vs.  Highway Holdings Limited

Papa Johns International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Papa Johns International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Papa Johns is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Highway Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Highway Holdings Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Highway Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Papa Johns and Highway Holdings

The main advantage of trading using opposite Papa Johns and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Papa Johns 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 Papa Johns International 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.