Correlation Between MEDICAL FACILITIES and Highlight Communications

Can any of the company-specific risk be diversified away by investing in both MEDICAL FACILITIES 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 MEDICAL FACILITIES and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MEDICAL FACILITIES NEW and Highlight Communications AG, you can compare the effects of market volatilities on MEDICAL FACILITIES 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 MEDICAL FACILITIES with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and Highlight Communications.

Diversification Opportunities for MEDICAL FACILITIES and Highlight Communications

0.27

Correlation Coefficient

MEDICAL FACILITIES  Highlight Communications

Modest diversification

The 3 months correlation between MEDICAL and Highlight is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW 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 MEDICAL FACILITIES i.e., MEDICAL FACILITIES and Highlight Communications go up and down completely randomly.

Pair Corralation between MEDICAL FACILITIES and Highlight Communications

Assuming the 90 days horizon MEDICAL FACILITIES is expected to generate 2.34 times less return on investment than Highlight Communications. But when comparing it to its historical volatility, MEDICAL FACILITIES NEW is 2.26 times less risky than Highlight Communications. It trades about 0.06 of its potential returns per unit of risk. Highlight Communications AG is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Highlight Communications AG on November 19, 2024 and sell it today you would earn a total of  13.00  from holding Highlight Communications AG or generate 13.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MEDICAL FACILITIES NEW  vs.  Highlight Communications AG

MEDICAL FACILITIES NEW

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MEDICAL FACILITIES NEW are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MEDICAL FACILITIES may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Highlight Communications

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Highlight Communications AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Highlight Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MEDICAL FACILITIES and Highlight Communications

The main advantage of trading using opposite MEDICAL FACILITIES and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICAL FACILITIES 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.

The idea behind MEDICAL FACILITIES NEW and Highlight Communications AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.