Correlation Between Highlight Communications and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and AUTO TRADER 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 AUTO TRADER 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 AUTO TRADER ADR, you can compare the effects of market volatilities on Highlight Communications and AUTO TRADER 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 AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and AUTO TRADER.
Diversification Opportunities for Highlight Communications and AUTO TRADER
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Highlight and AUTO is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and AUTO TRADER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTO TRADER ADR 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 AUTO TRADER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTO TRADER ADR has no effect on the direction of Highlight Communications i.e., Highlight Communications and AUTO TRADER go up and down completely randomly.
Pair Corralation between Highlight Communications and AUTO TRADER
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 4.11 times more return on investment than AUTO TRADER. However, Highlight Communications is 4.11 times more volatile than AUTO TRADER ADR. It trades about 0.25 of its potential returns per unit of risk. AUTO TRADER ADR is currently generating about -0.15 per unit of risk. If you would invest 114.00 in Highlight Communications AG on October 30, 2024 and sell it today you would earn a total of 35.00 from holding Highlight Communications AG or generate 30.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Communications AG vs. AUTO TRADER ADR
Performance |
| Timeline |
| Highlight Communications |
| AUTO TRADER ADR |
Highlight Communications and AUTO TRADER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and AUTO TRADER
The main advantage of trading using opposite Highlight Communications and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, AUTO TRADER 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 AUTO TRADER will offset losses from the drop in AUTO TRADER's long position.| Highlight Communications vs. Keck Seng Investments | Highlight Communications vs. Gladstone Investment | Highlight Communications vs. CENTURIA OFFICE REIT | Highlight Communications vs. NURAN WIRELESS INC |
| AUTO TRADER vs. Alphabet Class A | AUTO TRADER vs. Meta Platforms | AUTO TRADER vs. Tencent Holdings Ltd | AUTO TRADER vs. Tencent Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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