Correlation Between Highlight Communications and X FAB
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and X FAB 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 X FAB 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Highlight Communications and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and X FAB.
Diversification Opportunities for Highlight Communications and X FAB
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Highlight and XFB is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Highlight Communications i.e., Highlight Communications and X FAB go up and down completely randomly.
Pair Corralation between Highlight Communications and X FAB
Assuming the 90 days trading horizon Highlight Communications is expected to generate 1.01 times less return on investment than X FAB. But when comparing it to its historical volatility, Highlight Communications AG is 1.07 times less risky than X FAB. It trades about 0.32 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 425.00 in X FAB Silicon Foundries on September 14, 2024 and sell it today you would earn a total of 69.00 from holding X FAB Silicon Foundries or generate 16.24% 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. X FAB Silicon Foundries
Performance |
| Timeline |
| Highlight Communications |
| X FAB Silicon |
Highlight Communications and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and X FAB
The main advantage of trading using opposite Highlight Communications and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Highlight Communications vs. The Walt Disney | Highlight Communications vs. Charter Communications | Highlight Communications vs. Warner Music Group | Highlight Communications vs. Superior Plus Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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