Correlation Between Highlight Communications and AWILCO DRILLING
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and AWILCO DRILLING 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 Highlight Communications and AWILCO DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highlight Communications AG and AWILCO DRILLING PLC, you can compare the effects of market volatilities on Highlight Communications and AWILCO DRILLING 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 Highlight Communications with a short position of AWILCO DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and AWILCO DRILLING.
Diversification Opportunities for Highlight Communications and AWILCO DRILLING
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Highlight and AWILCO is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and AWILCO DRILLING PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AWILCO DRILLING PLC and Highlight Communications 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 Highlight Communications AG are associated (or correlated) with AWILCO DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AWILCO DRILLING PLC has no effect on the direction of Highlight Communications i.e., Highlight Communications and AWILCO DRILLING go up and down completely randomly.
Pair Corralation between Highlight Communications and AWILCO DRILLING
Assuming the 90 days trading horizon Highlight Communications AG is expected to under-perform the AWILCO DRILLING. But the stock apears to be less risky and, when comparing its historical volatility, Highlight Communications AG is 2.11 times less risky than AWILCO DRILLING. The stock trades about -0.05 of its potential returns per unit of risk. The AWILCO DRILLING PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 185.00 in AWILCO DRILLING PLC on September 22, 2024 and sell it today you would lose (2.00) from holding AWILCO DRILLING PLC or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Communications AG vs. AWILCO DRILLING PLC
Performance |
| Timeline |
| Highlight Communications |
| AWILCO DRILLING PLC |
Highlight Communications and AWILCO DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and AWILCO DRILLING
The main advantage of trading using opposite Highlight Communications and AWILCO DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, AWILCO DRILLING 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 AWILCO DRILLING will offset losses from the drop in AWILCO DRILLING's long position.| Highlight Communications vs. The Walt Disney | Highlight Communications vs. Charter Communications | Highlight Communications vs. Superior Plus Corp | Highlight Communications vs. SIVERS SEMICONDUCTORS AB |
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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 the Transaction History module to view history of all your transactions and understand their impact on performance.
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