Correlation Between Highlight Communications and NITTO DENKO
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and NITTO DENKO 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 NITTO DENKO 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 NITTO DENKO P, you can compare the effects of market volatilities on Highlight Communications and NITTO DENKO 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 NITTO DENKO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and NITTO DENKO.
Diversification Opportunities for Highlight Communications and NITTO DENKO
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Highlight and NITTO is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and NITTO DENKO P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NITTO DENKO P 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 NITTO DENKO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NITTO DENKO P has no effect on the direction of Highlight Communications i.e., Highlight Communications and NITTO DENKO go up and down completely randomly.
Pair Corralation between Highlight Communications and NITTO DENKO
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 2.69 times more return on investment than NITTO DENKO. However, Highlight Communications is 2.69 times more volatile than NITTO DENKO P. It trades about 0.18 of its potential returns per unit of risk. NITTO DENKO P is currently generating about 0.12 per unit of risk. If you would invest 98.00 in Highlight Communications AG on October 30, 2024 and sell it today you would earn a total of 51.00 from holding Highlight Communications AG or generate 52.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.33% |
| Values | Daily Returns |
Highlight Communications AG vs. NITTO DENKO P
Performance |
| Timeline |
| Highlight Communications |
| NITTO DENKO P |
Highlight Communications and NITTO DENKO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and NITTO DENKO
The main advantage of trading using opposite Highlight Communications and NITTO DENKO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, NITTO DENKO 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 NITTO DENKO will offset losses from the drop in NITTO DENKO's long position.| Highlight Communications vs. Keck Seng Investments | Highlight Communications vs. Gladstone Investment | Highlight Communications vs. CENTURIA OFFICE REIT | Highlight Communications vs. NURAN WIRELESS INC |
| NITTO DENKO vs. Gruppo Mutuionline SpA | NITTO DENKO vs. Salesforce | NITTO DENKO vs. AAC TECHNOLOGHLDGADR | NITTO DENKO vs. Firan Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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