Correlation Between Prosiebensat and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both Prosiebensat 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 Prosiebensat and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosiebensat 1 Media and Highlight Communications AG, you can compare the effects of market volatilities on Prosiebensat 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 Prosiebensat with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and Highlight Communications.
Diversification Opportunities for Prosiebensat and Highlight Communications
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prosiebensat and Highlight is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and Prosiebensat 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 Prosiebensat 1 Media 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 Prosiebensat i.e., Prosiebensat and Highlight Communications go up and down completely randomly.
Pair Corralation between Prosiebensat and Highlight Communications
Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to under-perform the Highlight Communications. In addition to that, Prosiebensat is 1.16 times more volatile than Highlight Communications AG. It trades about -0.06 of its total potential returns per unit of risk. Highlight Communications AG is currently generating about 0.21 per unit of volatility. If you would invest 93.00 in Highlight Communications AG on September 13, 2024 and sell it today you would earn a total of 22.00 from holding Highlight Communications AG or generate 23.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosiebensat 1 Media vs. Highlight Communications AG
Performance |
| Timeline |
| Prosiebensat 1 Media |
| Highlight Communications |
Prosiebensat and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosiebensat and Highlight Communications
The main advantage of trading using opposite Prosiebensat and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosiebensat 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.| Prosiebensat vs. Vivendi SE | Prosiebensat vs. News Corporation | Prosiebensat vs. Superior Plus Corp | Prosiebensat vs. NMI Holdings |
| Highlight Communications vs. Solstad Offshore ASA | Highlight Communications vs. SBM OFFSHORE | Highlight Communications vs. Ares Management Corp | Highlight Communications vs. TOREX SEMICONDUCTOR LTD |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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