Correlation Between Gold Road and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both Gold Road 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 Gold Road and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Road Resources and Highlight Communications AG, you can compare the effects of market volatilities on Gold Road 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 Gold Road with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Highlight Communications.
Diversification Opportunities for Gold Road and Highlight Communications
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and Highlight is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and Gold Road 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 Gold Road Resources 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 Gold Road i.e., Gold Road and Highlight Communications go up and down completely randomly.
Pair Corralation between Gold Road and Highlight Communications
Assuming the 90 days horizon Gold Road Resources is expected to generate 0.97 times more return on investment than Highlight Communications. However, Gold Road Resources is 1.03 times less risky than Highlight Communications. It trades about 0.09 of its potential returns per unit of risk. Highlight Communications AG is currently generating about -0.05 per unit of risk. If you would invest 115.00 in Gold Road Resources on September 22, 2024 and sell it today you would earn a total of 5.00 from holding Gold Road Resources or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Highlight Communications AG
Performance |
| Timeline |
| Gold Road Resources |
| Highlight Communications |
Gold Road and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Highlight Communications
The main advantage of trading using opposite Gold Road and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road 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.| Gold Road vs. Cass Information Systems | Gold Road vs. INFORMATION SVC GRP | Gold Road vs. Chalice Mining Limited | Gold Road vs. TERADATA |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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