Correlation Between Highlight Communications and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and ITALIAN WINE 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 ITALIAN WINE 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 ITALIAN WINE BRANDS, you can compare the effects of market volatilities on Highlight Communications and ITALIAN WINE 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 ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and ITALIAN WINE.
Diversification Opportunities for Highlight Communications and ITALIAN WINE
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Highlight and ITALIAN is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS 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 ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of Highlight Communications i.e., Highlight Communications and ITALIAN WINE go up and down completely randomly.
Pair Corralation between Highlight Communications and ITALIAN WINE
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 1.67 times more return on investment than ITALIAN WINE. However, Highlight Communications is 1.67 times more volatile than ITALIAN WINE BRANDS. It trades about 0.21 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about -0.01 per unit of risk. If you would invest 133.00 in Highlight Communications AG on November 7, 2024 and sell it today you would earn a total of 22.00 from holding Highlight Communications AG or generate 16.54% 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. ITALIAN WINE BRANDS
Performance |
| Timeline |
| Highlight Communications |
| ITALIAN WINE BRANDS |
Highlight Communications and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and ITALIAN WINE
The main advantage of trading using opposite Highlight Communications and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.| Highlight Communications vs. OAKTRSPECLENDNEW | Highlight Communications vs. Khiron Life Sciences | Highlight Communications vs. UNICREDIT SPA ADR | Highlight Communications vs. United States Steel |
| ITALIAN WINE vs. MGP Ingredients | ITALIAN WINE vs. NAKED WINES PLC | ITALIAN WINE vs. CHINA TONTINE WINES | ITALIAN WINE vs. Superior Plus Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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