Correlation Between High Coast and NOTE AB

Can any of the company-specific risk be diversified away by investing in both High Coast and NOTE AB 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 High Coast and NOTE AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between High Coast Distillery and NOTE AB, you can compare the effects of market volatilities on High Coast and NOTE AB 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 High Coast with a short position of NOTE AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Coast and NOTE AB.

Diversification Opportunities for High Coast and NOTE AB

0.66

Correlation Coefficient

High Coast  NOTE AB

Poor diversification

The 3 months correlation between High and NOTE is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding High Coast Distillery and NOTE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOTE AB and High Coast 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 High Coast Distillery are associated (or correlated) with NOTE AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOTE AB has no effect on the direction of High Coast i.e., High Coast and NOTE AB go up and down completely randomly.

Pair Corralation between High Coast and NOTE AB

Assuming the 90 days trading horizon High Coast Distillery is expected to generate 1.18 times more return on investment than NOTE AB. However, High Coast is 1.18 times more volatile than NOTE AB. It trades about 0.0 of its potential returns per unit of risk. NOTE AB is currently generating about -0.01 per unit of risk. If you would invest  5,313  in High Coast Distillery on October 9, 2024 and sell it today you would lose (993.00) from holding High Coast Distillery or give up 18.69% of portfolio value over 90 days.

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

High Coast Distillery  vs.  NOTE AB

High Coast Distillery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in High Coast Distillery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, High Coast sustained solid returns over the last few months and may actually be approaching a breakup point.

NOTE AB

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NOTE AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NOTE AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with High Coast and NOTE AB

The main advantage of trading using opposite High Coast and NOTE AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Coast position performs unexpectedly, NOTE AB 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 NOTE AB will offset losses from the drop in NOTE AB's long position.

The idea behind High Coast Distillery and NOTE AB 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.