Correlation Between High Liner and Data Communications
Can any of the company-specific risk be diversified away by investing in both High Liner and Data 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 High Liner and Data Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and Data Communications Management, you can compare the effects of market volatilities on High Liner and Data 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 High Liner with a short position of Data Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and Data Communications.
Diversification Opportunities for High Liner and Data Communications
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between High and Data is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and Data Communications Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Communications and High Liner 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 High Liner Foods are associated (or correlated) with Data Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Communications has no effect on the direction of High Liner i.e., High Liner and Data Communications go up and down completely randomly.
Pair Corralation between High Liner and Data Communications
Assuming the 90 days trading horizon High Liner is expected to generate 2.11 times less return on investment than Data Communications. But when comparing it to its historical volatility, High Liner Foods is 3.48 times less risky than Data Communications. It trades about 0.14 of its potential returns per unit of risk. Data Communications Management is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 211.00 in Data Communications Management on November 27, 2024 and sell it today you would earn a total of 12.00 from holding Data Communications Management or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Liner Foods vs. Data Communications Management
Performance |
| Timeline |
| High Liner Foods |
| Data Communications |
High Liner and Data Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and Data Communications
The main advantage of trading using opposite High Liner and Data Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner position performs unexpectedly, Data 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 Data Communications will offset losses from the drop in Data Communications' long position.| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
| Data Communications vs. Baylin Technologies | Data Communications vs. Kits Eyecare | Data Communications vs. Greenlane Renewables | Data Communications vs. Supremex |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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