Correlation Between Highlight Communications and First Quantum
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and First Quantum 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 First Quantum 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 First Quantum Minerals, you can compare the effects of market volatilities on Highlight Communications and First Quantum 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 First Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and First Quantum.
Diversification Opportunities for Highlight Communications and First Quantum
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Highlight and First is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals 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 First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of Highlight Communications i.e., Highlight Communications and First Quantum go up and down completely randomly.
Pair Corralation between Highlight Communications and First Quantum
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 1.04 times more return on investment than First Quantum. However, Highlight Communications is 1.04 times more volatile than First Quantum Minerals. It trades about 0.3 of its potential returns per unit of risk. First Quantum Minerals is currently generating about 0.19 per unit of risk. If you would invest 99.00 in Highlight Communications AG on September 15, 2024 and sell it today you would earn a total of 15.00 from holding Highlight Communications AG or generate 15.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Communications AG vs. First Quantum Minerals
Performance |
| Timeline |
| Highlight Communications |
| First Quantum Minerals |
Highlight Communications and First Quantum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and First Quantum
The main advantage of trading using opposite Highlight Communications and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, First Quantum 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 First Quantum will offset losses from the drop in First Quantum's long position.| Highlight Communications vs. The Walt Disney | Highlight Communications vs. Charter Communications | Highlight Communications vs. Warner Music Group | Highlight Communications vs. Superior Plus Corp |
| First Quantum vs. Spirent Communications plc | First Quantum vs. SBA Communications Corp | First Quantum vs. Highlight Communications AG | First Quantum vs. Entravision Communications |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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