Correlation Between Highlight Communications and EURASIAN MINERALS
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and EURASIAN MINERALS 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 EURASIAN MINERALS 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 EURASIAN MINERALS, you can compare the effects of market volatilities on Highlight Communications and EURASIAN MINERALS 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 EURASIAN MINERALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and EURASIAN MINERALS.
Diversification Opportunities for Highlight Communications and EURASIAN MINERALS
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Highlight and EURASIAN is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and EURASIAN MINERALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EURASIAN MINERALS 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 EURASIAN MINERALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EURASIAN MINERALS has no effect on the direction of Highlight Communications i.e., Highlight Communications and EURASIAN MINERALS go up and down completely randomly.
Pair Corralation between Highlight Communications and EURASIAN MINERALS
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 4.84 times more return on investment than EURASIAN MINERALS. However, Highlight Communications is 4.84 times more volatile than EURASIAN MINERALS. It trades about 0.23 of its potential returns per unit of risk. EURASIAN MINERALS is currently generating about -0.04 per unit of risk. If you would invest 114.00 in Highlight Communications AG on October 29, 2024 and sell it today you would earn a total of 33.00 from holding Highlight Communications AG or generate 28.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Communications AG vs. EURASIAN MINERALS
Performance |
| Timeline |
| Highlight Communications |
| EURASIAN MINERALS |
Highlight Communications and EURASIAN MINERALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and EURASIAN MINERALS
The main advantage of trading using opposite Highlight Communications and EURASIAN MINERALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, EURASIAN MINERALS 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 EURASIAN MINERALS will offset losses from the drop in EURASIAN MINERALS's long position.| Highlight Communications vs. Beta Systems Software | Highlight Communications vs. PACIFIC ONLINE | Highlight Communications vs. Japan Tobacco | Highlight Communications vs. GungHo Online Entertainment |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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