Correlation Between Highlight Communications and Collins Foods
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and Collins Foods 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 Collins Foods 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 Collins Foods Limited, you can compare the effects of market volatilities on Highlight Communications and Collins Foods 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 Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and Collins Foods.
Diversification Opportunities for Highlight Communications and Collins Foods
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Highlight and Collins is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and Collins Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods Limited 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 Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods Limited has no effect on the direction of Highlight Communications i.e., Highlight Communications and Collins Foods go up and down completely randomly.
Pair Corralation between Highlight Communications and Collins Foods
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 1.76 times more return on investment than Collins Foods. However, Highlight Communications is 1.76 times more volatile than Collins Foods Limited. It trades about 0.33 of its potential returns per unit of risk. Collins Foods Limited is currently generating about 0.25 per unit of risk. If you would invest 99.00 in Highlight Communications AG on September 2, 2024 and sell it today you would earn a total of 22.00 from holding Highlight Communications AG or generate 22.22% 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. Collins Foods Limited
Performance |
| Timeline |
| Highlight Communications |
| Collins Foods Limited |
Highlight Communications and Collins Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and Collins Foods
The main advantage of trading using opposite Highlight Communications and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.| Highlight Communications vs. Netflix | Highlight Communications vs. Warner Music Group | Highlight Communications vs. Superior Plus Corp | Highlight Communications vs. NMI Holdings |
| Collins Foods vs. Highlight Communications AG | Collins Foods vs. PRECISION DRILLING P | Collins Foods vs. International Consolidated Airlines | Collins Foods vs. Southwest Airlines Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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