Correlation Between Highlight Communications and Easy Software
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and Easy Software 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 Easy Software 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 Easy Software AG, you can compare the effects of market volatilities on Highlight Communications and Easy Software 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 Easy Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and Easy Software.
Diversification Opportunities for Highlight Communications and Easy Software
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Highlight and Easy is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and Easy Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easy Software AG 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 Easy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easy Software AG has no effect on the direction of Highlight Communications i.e., Highlight Communications and Easy Software go up and down completely randomly.
Pair Corralation between Highlight Communications and Easy Software
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 1.49 times more return on investment than Easy Software. However, Highlight Communications is 1.49 times more volatile than Easy Software AG. It trades about 0.23 of its potential returns per unit of risk. Easy Software AG is currently generating about 0.17 per unit of risk. If you would invest 99.00 in Highlight Communications AG on October 19, 2024 and sell it today you would earn a total of 53.00 from holding Highlight Communications AG or generate 53.54% 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. Easy Software AG
Performance |
| Timeline |
| Highlight Communications |
| Easy Software AG |
Highlight Communications and Easy Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and Easy Software
The main advantage of trading using opposite Highlight Communications and Easy Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, Easy Software 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 Easy Software will offset losses from the drop in Easy Software's long position.| Highlight Communications vs. The Yokohama Rubber | Highlight Communications vs. THRACE PLASTICS | Highlight Communications vs. NEWELL RUBBERMAID | Highlight Communications vs. ALBIS LEASING AG |
| Easy Software vs. ELMOS SEMICONDUCTOR | Easy Software vs. Kingdee International Software | Easy Software vs. Taiwan Semiconductor Manufacturing | Easy Software vs. Sunny Optical Technology |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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