Correlation Between Highlight Communications and Stockland

Can any of the company-specific risk be diversified away by investing in both Highlight Communications and Stockland 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 Stockland 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 Stockland, you can compare the effects of market volatilities on Highlight Communications and Stockland 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 Stockland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and Stockland.

Diversification Opportunities for Highlight Communications and Stockland

-0.37

Correlation Coefficient

Highlight Communications  Stockland

Very good diversification

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

Pair Corralation between Highlight Communications and Stockland

Assuming the 90 days trading horizon Highlight Communications AG is expected to under-perform the Stockland. In addition to that, Highlight Communications is 1.5 times more volatile than Stockland. It trades about -0.05 of its total potential returns per unit of risk. Stockland is currently generating about 0.04 per unit of volatility. If you would invest  216.00  in Stockland on October 23, 2024 and sell it today you would earn a total of  79.00  from holding Stockland or generate 36.57% 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.  Stockland

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 fragile technical and fundamental indicators, Highlight Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Stockland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stockland has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Stockland is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Highlight Communications and Stockland

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

The idea behind Highlight Communications AG and Stockland 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.