Correlation Between THRACE PLASTICS and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS 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 THRACE PLASTICS and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THRACE PLASTICS and Highlight Communications AG, you can compare the effects of market volatilities on THRACE PLASTICS 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 THRACE PLASTICS with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and Highlight Communications.
Diversification Opportunities for THRACE PLASTICS and Highlight Communications
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THRACE and Highlight is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS i.e., THRACE PLASTICS and Highlight Communications go up and down completely randomly.
Pair Corralation between THRACE PLASTICS and Highlight Communications
Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 0.3 times more return on investment than Highlight Communications. However, THRACE PLASTICS is 3.33 times less risky than Highlight Communications. It trades about 0.03 of its potential returns per unit of risk. Highlight Communications AG is currently generating about -0.08 per unit of risk. If you would invest 391.00 in THRACE PLASTICS on September 2, 2024 and sell it today you would earn a total of 9.00 from holding THRACE PLASTICS or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THRACE PLASTICS vs. Highlight Communications AG
Performance |
| Timeline |
| THRACE PLASTICS |
| Highlight Communications |
THRACE PLASTICS and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THRACE PLASTICS and Highlight Communications
The main advantage of trading using opposite THRACE PLASTICS and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS 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.| THRACE PLASTICS vs. SOUTHWEST AIRLINES | THRACE PLASTICS vs. Major Drilling Group | THRACE PLASTICS vs. Spirent Communications plc | THRACE PLASTICS vs. SINGAPORE AIRLINES |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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