Correlation Between Highlight Communications and ULTRA CLEAN
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and ULTRA CLEAN 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 ULTRA CLEAN 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 ULTRA CLEAN HLDGS, you can compare the effects of market volatilities on Highlight Communications and ULTRA CLEAN 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 ULTRA CLEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and ULTRA CLEAN.
Diversification Opportunities for Highlight Communications and ULTRA CLEAN
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Highlight and ULTRA is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and ULTRA CLEAN HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ULTRA CLEAN HLDGS 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 ULTRA CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ULTRA CLEAN HLDGS has no effect on the direction of Highlight Communications i.e., Highlight Communications and ULTRA CLEAN go up and down completely randomly.
Pair Corralation between Highlight Communications and ULTRA CLEAN
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 3.05 times more return on investment than ULTRA CLEAN. However, Highlight Communications is 3.05 times more volatile than ULTRA CLEAN HLDGS. It trades about 0.24 of its potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about 0.01 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. ULTRA CLEAN HLDGS
Performance |
| Timeline |
| Highlight Communications |
| ULTRA CLEAN HLDGS |
Highlight Communications and ULTRA CLEAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and ULTRA CLEAN
The main advantage of trading using opposite Highlight Communications and ULTRA CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, ULTRA CLEAN 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 ULTRA CLEAN will offset losses from the drop in ULTRA CLEAN's long position.| Highlight Communications vs. HK Electric Investments | Highlight Communications vs. RYANAIR HLDGS ADR | Highlight Communications vs. Chuangs China Investments | Highlight Communications vs. Wizz Air Holdings |
| ULTRA CLEAN vs. Highlight Communications AG | ULTRA CLEAN vs. JD SPORTS FASH | ULTRA CLEAN vs. Fukuyama Transporting Co | ULTRA CLEAN vs. WillScot Mobile Mini |
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 Stocks Directory module to find actively traded stocks across global markets.
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