Correlation Between Highlight Communications and ALLIANZ SE
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and ALLIANZ SE 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 ALLIANZ SE 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 ALLIANZ SE UNSPADR, you can compare the effects of market volatilities on Highlight Communications and ALLIANZ SE 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 ALLIANZ SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and ALLIANZ SE.
Diversification Opportunities for Highlight Communications and ALLIANZ SE
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Highlight and ALLIANZ is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and ALLIANZ SE UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLIANZ SE UNSPADR 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 ALLIANZ SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLIANZ SE UNSPADR has no effect on the direction of Highlight Communications i.e., Highlight Communications and ALLIANZ SE go up and down completely randomly.
Pair Corralation between Highlight Communications and ALLIANZ SE
Assuming the 90 days trading horizon Highlight Communications AG is expected to under-perform the ALLIANZ SE. In addition to that, Highlight Communications is 2.19 times more volatile than ALLIANZ SE UNSPADR. It trades about -0.13 of its total potential returns per unit of risk. ALLIANZ SE UNSPADR is currently generating about 0.06 per unit of volatility. If you would invest 2,580 in ALLIANZ SE UNSPADR on September 3, 2024 and sell it today you would earn a total of 300.00 from holding ALLIANZ SE UNSPADR or generate 11.63% 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. ALLIANZ SE UNSPADR
Performance |
| Timeline |
| Highlight Communications |
| ALLIANZ SE UNSPADR |
Highlight Communications and ALLIANZ SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and ALLIANZ SE
The main advantage of trading using opposite Highlight Communications and ALLIANZ SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, ALLIANZ SE 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 ALLIANZ SE will offset losses from the drop in ALLIANZ SE's long position.The idea behind Highlight Communications AG and ALLIANZ SE UNSPADR 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.| ALLIANZ SE vs. MGIC INVESTMENT | ALLIANZ SE vs. Strategic Investments AS | ALLIANZ SE vs. SANOK RUBBER ZY | ALLIANZ SE vs. REINET INVESTMENTS SCA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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