Correlation Between Highlight Communications and CHINA PACINGRGDR5
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and CHINA PACINGRGDR5 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 CHINA PACINGRGDR5 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 CHINA PACINGRGDR5 YC1, you can compare the effects of market volatilities on Highlight Communications and CHINA PACINGRGDR5 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 CHINA PACINGRGDR5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and CHINA PACINGRGDR5.
Diversification Opportunities for Highlight Communications and CHINA PACINGRGDR5
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Highlight and CHINA is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and CHINA PACINGRGDR5 YC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA PACINGRGDR5 YC1 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 CHINA PACINGRGDR5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA PACINGRGDR5 YC1 has no effect on the direction of Highlight Communications i.e., Highlight Communications and CHINA PACINGRGDR5 go up and down completely randomly.
Pair Corralation between Highlight Communications and CHINA PACINGRGDR5
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 3.05 times more return on investment than CHINA PACINGRGDR5. However, Highlight Communications is 3.05 times more volatile than CHINA PACINGRGDR5 YC1. It trades about 0.33 of its potential returns per unit of risk. CHINA PACINGRGDR5 YC1 is currently generating about -0.16 per unit of risk. If you would invest 110.00 in Highlight Communications AG on October 25, 2024 and sell it today you would earn a total of 45.00 from holding Highlight Communications AG or generate 40.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Highlight Communications AG vs. CHINA PACINGRGDR5 YC1
Performance |
| Timeline |
| Highlight Communications |
| CHINA PACINGRGDR5 YC1 |
Highlight Communications and CHINA PACINGRGDR5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and CHINA PACINGRGDR5
The main advantage of trading using opposite Highlight Communications and CHINA PACINGRGDR5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, CHINA PACINGRGDR5 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 CHINA PACINGRGDR5 will offset losses from the drop in CHINA PACINGRGDR5's long position.The idea behind Highlight Communications AG and CHINA PACINGRGDR5 YC1 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| CHINA PACINGRGDR5 vs. Siemens Healthineers AG | CHINA PACINGRGDR5 vs. WESANA HEALTH HOLD | CHINA PACINGRGDR5 vs. Molina Healthcare | CHINA PACINGRGDR5 vs. SHIP HEALTHCARE HLDGINC |
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.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |