Correlation Between PROSIEBENSAT1 MEDIADR4/ and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and Highlight Communications AG, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4/ and Highlight Communications.
Diversification Opportunities for PROSIEBENSAT1 MEDIADR4/ and Highlight Communications
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PROSIEBENSAT1 and Highlight is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4/ i.e., PROSIEBENSAT1 MEDIADR4/ and Highlight Communications go up and down completely randomly.
Pair Corralation between PROSIEBENSAT1 MEDIADR4/ and Highlight Communications
Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4 is expected to under-perform the Highlight Communications. In addition to that, PROSIEBENSAT1 MEDIADR4/ is 1.21 times more volatile than Highlight Communications AG. It trades about -0.07 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 | 97.73% |
| Values | Daily Returns |
PROSIEBENSAT1 MEDIADR4 vs. Highlight Communications AG
Performance |
| Timeline |
| PROSIEBENSAT1 MEDIADR4/ |
| Highlight Communications |
PROSIEBENSAT1 MEDIADR4/ and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PROSIEBENSAT1 MEDIADR4/ and Highlight Communications
The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4/ and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4/ 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.| PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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