Correlation Between Highlight Communications and Newmont

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

Diversification Opportunities for Highlight Communications and Newmont

-0.61

Correlation Coefficient

Highlight Communications  Newmont

Excellent diversification

The 3 months correlation between Highlight and Newmont is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of Highlight Communications i.e., Highlight Communications and Newmont go up and down completely randomly.

Pair Corralation between Highlight Communications and Newmont

Assuming the 90 days trading horizon Highlight Communications AG is expected to under-perform the Newmont. In addition to that, Highlight Communications is 1.26 times more volatile than Newmont. It trades about -0.06 of its total potential returns per unit of risk. Newmont is currently generating about -0.01 per unit of volatility. If you would invest  4,455  in Newmont on October 10, 2024 and sell it today you would lose (758.00) from holding Newmont or give up 17.01% of portfolio value over 90 days.

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

Highlight Communications AG  vs.  Newmont

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.

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Highlight Communications and Newmont

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

The idea behind Highlight Communications AG and Newmont 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.