Correlation Between MTI WIRELESS and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both MTI WIRELESS and Highlight Communications 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 MTI WIRELESS and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTI WIRELESS EDGE and Highlight Communications AG, you can compare the effects of market volatilities on MTI WIRELESS and Highlight Communications 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 MTI WIRELESS with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI WIRELESS and Highlight Communications.
Diversification Opportunities for MTI WIRELESS and Highlight Communications
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MTI and Highlight is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding MTI WIRELESS EDGE and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and MTI WIRELESS 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 MTI WIRELESS EDGE are associated (or correlated) with Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of MTI WIRELESS i.e., MTI WIRELESS and Highlight Communications go up and down completely randomly.
Pair Corralation between MTI WIRELESS and Highlight Communications
Assuming the 90 days horizon MTI WIRELESS EDGE is expected to generate 0.77 times more return on investment than Highlight Communications. However, MTI WIRELESS EDGE is 1.29 times less risky than Highlight Communications. It trades about 0.0 of its potential returns per unit of risk. Highlight Communications AG is currently generating about -0.12 per unit of risk. If you would invest 47.00 in MTI WIRELESS EDGE on August 31, 2024 and sell it today you would lose (2.00) from holding MTI WIRELESS EDGE or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
MTI WIRELESS EDGE vs. Highlight Communications AG
Performance |
| Timeline |
| MTI WIRELESS EDGE |
| Highlight Communications |
MTI WIRELESS and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTI WIRELESS and Highlight Communications
The main advantage of trading using opposite MTI WIRELESS and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI WIRELESS position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.| MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc | MTI WIRELESS vs. Apple Inc |
| Highlight Communications vs. Netflix | Highlight Communications vs. Warner Music Group | Highlight Communications vs. Superior Plus Corp | Highlight Communications 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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