Correlation Between Highway Holdings and Invesco QQQ

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

Diversification Opportunities for Highway Holdings and Invesco QQQ

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Highway and Invesco is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Invesco QQQ Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco QQQ Trust 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 Invesco QQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco QQQ Trust has no effect on the direction of Highway Holdings i.e., Highway Holdings and Invesco QQQ go up and down completely randomly.

Pair Corralation between Highway Holdings and Invesco QQQ

Given the investment horizon of 90 days Highway Holdings Limited is expected to generate 1.41 times more return on investment than Invesco QQQ. However, Highway Holdings is 1.41 times more volatile than Invesco QQQ Trust. It trades about 0.05 of its potential returns per unit of risk. Invesco QQQ Trust is currently generating about -0.06 per unit of risk. If you would invest  216.00  in Highway Holdings Limited on September 11, 2022 and sell it today you would earn a total of  14.00  from holding Highway Holdings Limited or generate 6.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Highway Holdings Limited  vs.  Invesco QQQ Trust

 Performance (%) 
       Timeline  
Highway Holdings 
Highway Performance
3 of 100
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. Despite quite weak technical indicators, Highway Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Highway Price Channel

Invesco QQQ Trust 
Invesco Performance
0 of 100
Over the last 90 days Invesco QQQ Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF insiders.

Invesco Price Channel

Highway Holdings and Invesco QQQ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Highway Holdings and Invesco QQQ

The main advantage of trading using opposite Highway Holdings and Invesco QQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, Invesco QQQ 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 Invesco QQQ will offset losses from the drop in Invesco QQQ's long position.
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The idea behind Highway Holdings Limited and Invesco QQQ Trust 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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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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