Correlation Between Highway Holdings and JC Penney

Can any of the company-specific risk be diversified away by investing in both Highway Holdings and JC Penney 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 JC Penney 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 J C Penney, you can compare the effects of market volatilities on Highway Holdings and JC Penney 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 JC Penney. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and JC Penney.

Diversification Opportunities for Highway Holdings and JC Penney

0.0

Correlation Coefficient

Highway Holdings  JC Penney

Pay attention - limited upside

The 3 months correlation between Highway and JCP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and J C Penney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J C Penney 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 JC Penney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J C Penney has no effect on the direction of Highway Holdings i.e., Highway Holdings and JC Penney go up and down completely randomly.

Pair Corralation between Highway Holdings and JC Penney

If you would invest  207.00  in Highway Holdings Limited on February 2, 2024 and sell it today you would earn a total of  4.50  from holding Highway Holdings Limited or generate 2.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Highway Holdings Limited  vs.  J C Penney

Highway Holdings

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highway Holdings Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Highway Holdings is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

J C Penney

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days J C Penney has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, JC Penney is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Highway Holdings and JC Penney

The main advantage of trading using opposite Highway Holdings and JC Penney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, JC Penney 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 JC Penney will offset losses from the drop in JC Penney's long position.

The idea behind Highway Holdings Limited and J C Penney 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.