Correlation Between Grupo Aeroportuario and Highlight Communications

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

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

Diversification Opportunities for Grupo Aeroportuario and Highlight Communications

0.32

Correlation Coefficient

Grupo Aeroportuario  Highlight Communications

Weak diversification

The 3 months correlation between Grupo and Highlight is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aeroportuario del and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and Grupo Aeroportuario 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 Grupo Aeroportuario del 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 Grupo Aeroportuario i.e., Grupo Aeroportuario and Highlight Communications go up and down completely randomly.

Pair Corralation between Grupo Aeroportuario and Highlight Communications

Assuming the 90 days horizon Grupo Aeroportuario del is expected to generate 0.51 times more return on investment than Highlight Communications. However, Grupo Aeroportuario del is 1.97 times less risky than Highlight Communications. It trades about 0.14 of its potential returns per unit of risk. Highlight Communications AG is currently generating about -0.02 per unit of risk. If you would invest  15,691  in Grupo Aeroportuario del on September 14, 2024 and sell it today you would earn a total of  2,609  from holding Grupo Aeroportuario del or generate 16.63% return on investment over 90 days.

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

Grupo Aeroportuario del  vs.  Highlight Communications AG

Grupo Aeroportuario del

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Grupo Aeroportuario reported solid returns over the last few months and may actually be approaching a breakup point.

Highlight Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highlight Communications AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Highlight Communications is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Grupo Aeroportuario and Highlight Communications

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

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.