Correlation Between Highlight Communications and VIENNA INSURANCE
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and VIENNA INSURANCE 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 VIENNA INSURANCE 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 VIENNA INSURANCE GR, you can compare the effects of market volatilities on Highlight Communications and VIENNA INSURANCE 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 VIENNA INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and VIENNA INSURANCE.
Diversification Opportunities for Highlight Communications and VIENNA INSURANCE
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Highlight and VIENNA is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and VIENNA INSURANCE GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIENNA INSURANCE 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 VIENNA INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIENNA INSURANCE has no effect on the direction of Highlight Communications i.e., Highlight Communications and VIENNA INSURANCE go up and down completely randomly.
Pair Corralation between Highlight Communications and VIENNA INSURANCE
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 6.41 times more return on investment than VIENNA INSURANCE. However, Highlight Communications is 6.41 times more volatile than VIENNA INSURANCE GR. It trades about 0.2 of its potential returns per unit of risk. VIENNA INSURANCE GR is currently generating about 0.44 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 21.00 from holding Highlight Communications AG or generate 15.79% 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. VIENNA INSURANCE GR
Performance |
| Timeline |
| Highlight Communications |
| VIENNA INSURANCE |
Highlight Communications and VIENNA INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and VIENNA INSURANCE
The main advantage of trading using opposite Highlight Communications and VIENNA INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, VIENNA INSURANCE 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 VIENNA INSURANCE will offset losses from the drop in VIENNA INSURANCE's long position.| Highlight Communications vs. FORMPIPE SOFTWARE AB | Highlight Communications vs. Alfa Financial Software | Highlight Communications vs. BRIT AMER TOBACCO | Highlight Communications vs. IMPERIAL TOBACCO |
| VIENNA INSURANCE vs. HAVERTY FURNITURE A | VIENNA INSURANCE vs. Globex Mining Enterprises | VIENNA INSURANCE vs. CAIRN HOMES EO | VIENNA INSURANCE vs. Endeavour Mining PLC |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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