Correlation Between AWILCO DRILLING and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both AWILCO DRILLING and Highlight Communications 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 AWILCO DRILLING and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AWILCO DRILLING PLC and Highlight Communications AG, you can compare the effects of market volatilities on AWILCO DRILLING and Highlight Communications 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 AWILCO DRILLING with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of AWILCO DRILLING and Highlight Communications.
Diversification Opportunities for AWILCO DRILLING and Highlight Communications
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AWILCO and Highlight is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding AWILCO DRILLING PLC and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and AWILCO DRILLING 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 AWILCO DRILLING PLC are associated (or correlated) with Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of AWILCO DRILLING i.e., AWILCO DRILLING and Highlight Communications go up and down completely randomly.
Pair Corralation between AWILCO DRILLING and Highlight Communications
Assuming the 90 days trading horizon AWILCO DRILLING PLC is expected to generate 5.45 times more return on investment than Highlight Communications. However, AWILCO DRILLING is 5.45 times more volatile than Highlight Communications AG. It trades about 0.07 of its potential returns per unit of risk. Highlight Communications AG is currently generating about -0.09 per unit of risk. If you would invest 46.00 in AWILCO DRILLING PLC on September 21, 2024 and sell it today you would earn a total of 137.00 from holding AWILCO DRILLING PLC or generate 297.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AWILCO DRILLING PLC vs. Highlight Communications AG
Performance |
| Timeline |
| AWILCO DRILLING PLC |
| Highlight Communications |
AWILCO DRILLING and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AWILCO DRILLING and Highlight Communications
The main advantage of trading using opposite AWILCO DRILLING and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AWILCO DRILLING position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.| AWILCO DRILLING vs. BLUESCOPE STEEL | AWILCO DRILLING vs. Insteel Industries | AWILCO DRILLING vs. IMPERIAL TOBACCO | AWILCO DRILLING vs. MITSUBISHI STEEL MFG |
| Highlight Communications vs. The Walt Disney | Highlight Communications vs. Charter Communications | Highlight Communications vs. Superior Plus Corp | Highlight Communications vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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