Correlation Between Highlight Communications and Take-Two Interactive
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and Take-Two Interactive 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 Take-Two Interactive 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 Take Two Interactive Software, you can compare the effects of market volatilities on Highlight Communications and Take-Two Interactive 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 Take-Two Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and Take-Two Interactive.
Diversification Opportunities for Highlight Communications and Take-Two Interactive
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Highlight and Take-Two is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive 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 Take-Two Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Highlight Communications i.e., Highlight Communications and Take-Two Interactive go up and down completely randomly.
Pair Corralation between Highlight Communications and Take-Two Interactive
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 5.42 times more return on investment than Take-Two Interactive. However, Highlight Communications is 5.42 times more volatile than Take Two Interactive Software. It trades about 0.24 of its potential returns per unit of risk. Take Two Interactive Software is currently generating about -0.07 per unit of risk. If you would invest 114.00 in Highlight Communications AG on October 16, 2024 and sell it today you would earn a total of 33.00 from holding Highlight Communications AG or generate 28.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Communications AG vs. Take Two Interactive Software
Performance |
| Timeline |
| Highlight Communications |
| Take Two Interactive |
Highlight Communications and Take-Two Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and Take-Two Interactive
The main advantage of trading using opposite Highlight Communications and Take-Two Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, Take-Two Interactive 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 Take-Two Interactive will offset losses from the drop in Take-Two Interactive's long position.| Highlight Communications vs. Kingdee International Software | Highlight Communications vs. OPERA SOFTWARE | Highlight Communications vs. SPORT LISBOA E | Highlight Communications vs. DICKS Sporting Goods |
| Take-Two Interactive vs. Quaker Chemical | Take-Two Interactive vs. PLAY2CHILL SA ZY | Take-Two Interactive vs. ePlay Digital | Take-Two Interactive vs. Soken Chemical Engineering |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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