Correlation Between Vienna Insurance and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both Vienna Insurance 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 Vienna Insurance and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vienna Insurance Group and Highlight Communications AG, you can compare the effects of market volatilities on Vienna Insurance 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 Vienna Insurance with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vienna Insurance and Highlight Communications.
Diversification Opportunities for Vienna Insurance and Highlight Communications
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vienna and Highlight is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vienna Insurance Group and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and Vienna Insurance 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 Vienna Insurance Group 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 Vienna Insurance i.e., Vienna Insurance and Highlight Communications go up and down completely randomly.
Pair Corralation between Vienna Insurance and Highlight Communications
Assuming the 90 days trading horizon Vienna Insurance is expected to generate 2.49 times less return on investment than Highlight Communications. But when comparing it to its historical volatility, Vienna Insurance Group is 3.65 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 0.2 of returns per unit of risk over similar time horizon. If you would invest 133.00 in Highlight Communications AG on November 7, 2024 and sell it today you would earn a total of 21.00 from holding Highlight Communications AG or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vienna Insurance Group vs. Highlight Communications AG
Performance |
| Timeline |
| Vienna Insurance |
| Highlight Communications |
Vienna Insurance and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vienna Insurance and Highlight Communications
The main advantage of trading using opposite Vienna Insurance and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vienna Insurance 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.| Vienna Insurance vs. Zijin Mining Group | Vienna Insurance vs. Mitsui Chemicals | Vienna Insurance vs. FIREWEED METALS P | Vienna Insurance vs. AIR PRODCHEMICALS |
| Highlight Communications vs. FORMPIPE SOFTWARE AB | Highlight Communications vs. Alfa Financial Software | Highlight Communications vs. BRIT AMER TOBACCO | Highlight Communications vs. IMPERIAL TOBACCO |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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