Correlation Between Highlight Communications and Prosiebensat
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and Prosiebensat 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 Prosiebensat 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 Prosiebensat 1 Media, you can compare the effects of market volatilities on Highlight Communications and Prosiebensat 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 Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and Prosiebensat.
Diversification Opportunities for Highlight Communications and Prosiebensat
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Highlight and Prosiebensat is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media 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 Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of Highlight Communications i.e., Highlight Communications and Prosiebensat go up and down completely randomly.
Pair Corralation between Highlight Communications and Prosiebensat
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 0.86 times more return on investment than Prosiebensat. However, Highlight Communications AG is 1.16 times less risky than Prosiebensat. It trades about 0.21 of its potential returns per unit of risk. Prosiebensat 1 Media is currently generating about -0.06 per unit of risk. If you would invest 93.00 in Highlight Communications AG on September 13, 2024 and sell it today you would earn a total of 22.00 from holding Highlight Communications AG or generate 23.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Communications AG vs. Prosiebensat 1 Media
Performance |
| Timeline |
| Highlight Communications |
| Prosiebensat 1 Media |
Highlight Communications and Prosiebensat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and Prosiebensat
The main advantage of trading using opposite Highlight Communications and Prosiebensat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, Prosiebensat 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 Prosiebensat will offset losses from the drop in Prosiebensat's long position.| Highlight Communications vs. Solstad Offshore ASA | Highlight Communications vs. SBM OFFSHORE | Highlight Communications vs. Ares Management Corp | Highlight Communications vs. TOREX SEMICONDUCTOR LTD |
| Prosiebensat vs. Vivendi SE | Prosiebensat vs. News Corporation | Prosiebensat vs. Superior Plus Corp | Prosiebensat vs. NMI Holdings |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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