Correlation Between Highlight Communications and Canadian Natural

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

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

Diversification Opportunities for Highlight Communications and Canadian Natural

-0.37

Correlation Coefficient

Highlight Communications  Canadian Natural

Very good diversification

The 3 months correlation between Highlight and Canadian is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and Canadian Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Natural Res and Highlight Communications 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 Highlight Communications AG are associated (or correlated) with Canadian Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Natural Res has no effect on the direction of Highlight Communications i.e., Highlight Communications and Canadian Natural go up and down completely randomly.

Pair Corralation between Highlight Communications and Canadian Natural

Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 3.55 times more return on investment than Canadian Natural. However, Highlight Communications is 3.55 times more volatile than Canadian Natural Resources. It trades about 0.25 of its potential returns per unit of risk. Canadian Natural Resources is currently generating about 0.08 per unit of risk. If you would invest  116.00  in Highlight Communications AG on October 11, 2024 and sell it today you would earn a total of  37.00  from holding Highlight Communications AG or generate 31.9% return on investment over 90 days.

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

Highlight Communications AG  vs.  Canadian Natural Resources

Highlight Communications

Risk-Adjusted Performance

15 of 100

Good

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

Canadian Natural Res

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Highlight Communications and Canadian Natural

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

The idea behind Highlight Communications AG and Canadian Natural Resources 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.