Correlation Between Highlight Communications and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and BRIT AMER 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 BRIT AMER 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 BRIT AMER TOBACCO, you can compare the effects of market volatilities on Highlight Communications and BRIT AMER 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 BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and BRIT AMER.
Diversification Opportunities for Highlight Communications and BRIT AMER
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Highlight and BRIT is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO 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 BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of Highlight Communications i.e., Highlight Communications and BRIT AMER go up and down completely randomly.
Pair Corralation between Highlight Communications and BRIT AMER
Assuming the 90 days trading horizon Highlight Communications AG is expected to under-perform the BRIT AMER. In addition to that, Highlight Communications is 2.91 times more volatile than BRIT AMER TOBACCO. It trades about -0.05 of its total potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.12 per unit of volatility. If you would invest 2,543 in BRIT AMER TOBACCO on October 18, 2024 and sell it today you would earn a total of 945.00 from holding BRIT AMER TOBACCO or generate 37.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Communications AG vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| Highlight Communications |
| BRIT AMER TOBACCO |
Highlight Communications and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and BRIT AMER
The main advantage of trading using opposite Highlight Communications and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| Highlight Communications vs. LG Display Co | Highlight Communications vs. FIREWEED METALS P | Highlight Communications vs. ARDAGH METAL PACDL 0001 | Highlight Communications vs. InPlay Oil Corp |
| BRIT AMER vs. Guidewire Software | BRIT AMER vs. GBS Software AG | BRIT AMER vs. PSI Software AG | BRIT AMER vs. SPORT LISBOA E |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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