Correlation Between Highlight Communications and Evonik Industries
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and Evonik Industries 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 Evonik Industries 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 Evonik Industries AG, you can compare the effects of market volatilities on Highlight Communications and Evonik Industries 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 Evonik Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and Evonik Industries.
Diversification Opportunities for Highlight Communications and Evonik Industries
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Highlight and Evonik is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and Evonik Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evonik Industries 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 Evonik Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evonik Industries has no effect on the direction of Highlight Communications i.e., Highlight Communications and Evonik Industries go up and down completely randomly.
Pair Corralation between Highlight Communications and Evonik Industries
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 4.25 times more return on investment than Evonik Industries. However, Highlight Communications is 4.25 times more volatile than Evonik Industries AG. It trades about 0.21 of its potential returns per unit of risk. Evonik Industries AG is currently generating about 0.0 per unit of risk. If you would invest 106.00 in Highlight Communications AG on October 22, 2024 and sell it today you would earn a total of 46.00 from holding Highlight Communications AG or generate 43.4% 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. Evonik Industries AG
Performance |
| Timeline |
| Highlight Communications |
| Evonik Industries |
Highlight Communications and Evonik Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and Evonik Industries
The main advantage of trading using opposite Highlight Communications and Evonik Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, Evonik Industries 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 Evonik Industries will offset losses from the drop in Evonik Industries' long position.| Highlight Communications vs. Host Hotels Resorts | Highlight Communications vs. INTERCONT HOTELS | Highlight Communications vs. CDN IMPERIAL BANK | Highlight Communications vs. Virtu Financial |
| Evonik Industries vs. Highlight Communications AG | Evonik Industries vs. Zoom Video Communications | Evonik Industries vs. Citic Telecom International | Evonik Industries vs. UNIVERSAL MUSIC GROUP |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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