Correlation Between Waste Connections and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both Waste Connections 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 Waste Connections and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Connections and Highlight Communications AG, you can compare the effects of market volatilities on Waste Connections 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 Waste Connections with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Connections and Highlight Communications.
Diversification Opportunities for Waste Connections and Highlight Communications
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Waste and Highlight is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Waste Connections and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and Waste Connections 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 Waste Connections 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 Waste Connections i.e., Waste Connections and Highlight Communications go up and down completely randomly.
Pair Corralation between Waste Connections and Highlight Communications
Assuming the 90 days trading horizon Waste Connections is expected to generate 5.01 times less return on investment than Highlight Communications. But when comparing it to its historical volatility, Waste Connections is 6.11 times less risky than Highlight Communications. It trades about 0.29 of its potential returns per unit of risk. Highlight Communications AG is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 114.00 in Highlight Communications AG on November 3, 2024 and sell it today you would earn a total of 41.00 from holding Highlight Communications AG or generate 35.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Connections vs. Highlight Communications AG
Performance |
| Timeline |
| Waste Connections |
| Highlight Communications |
Waste Connections and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Connections and Highlight Communications
The main advantage of trading using opposite Waste Connections and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Connections 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.| Waste Connections vs. TEXAS ROADHOUSE | Waste Connections vs. Broadcom | Waste Connections vs. Playtech plc | Waste Connections vs. Gaming and Leisure |
| Highlight Communications vs. MCEWEN MINING INC | Highlight Communications vs. COMBA TELECOM SYST | Highlight Communications vs. ARDAGH METAL PACDL 0001 | Highlight Communications vs. HUTCHISON TELECOMM |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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