Correlation Between Highlight Communications and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and Ebro 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 Ebro 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 Ebro Foods SA, you can compare the effects of market volatilities on Highlight Communications and Ebro 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 Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and Ebro Foods.
Diversification Opportunities for Highlight Communications and Ebro Foods
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Highlight and Ebro is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and Ebro Foods SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods SA 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 Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods SA has no effect on the direction of Highlight Communications i.e., Highlight Communications and Ebro Foods go up and down completely randomly.
Pair Corralation between Highlight Communications and Ebro Foods
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 3.93 times more return on investment than Ebro Foods. However, Highlight Communications is 3.93 times more volatile than Ebro Foods SA. It trades about 0.12 of its potential returns per unit of risk. Ebro Foods SA is currently generating about 0.08 per unit of risk. If you would invest 142.00 in Highlight Communications AG on November 4, 2024 and sell it today you would earn a total of 13.00 from holding Highlight Communications AG or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Highlight Communications AG vs. Ebro Foods SA
Performance |
| Timeline |
| Highlight Communications |
| Ebro Foods SA |
Highlight Communications and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and Ebro Foods
The main advantage of trading using opposite Highlight Communications and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, Ebro 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.| Highlight Communications vs. SPARTAN STORES | Highlight Communications vs. H2O Retailing | Highlight Communications vs. UNIVMUSIC GRPADR050 | Highlight Communications vs. URBAN OUTFITTERS |
| Ebro Foods vs. INTERNET INJPADR 1 | Ebro Foods vs. HEMISPHERE EGY | Ebro Foods vs. ARDAGH METAL PACDL 0001 | Ebro Foods vs. Cogent Communications 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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