Correlation Between Highlight Communications and NVIDIA

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

Diversification Opportunities for Highlight Communications and NVIDIA

0.0

Correlation Coefficient

Highlight Communications  NVIDIA

Pay attention - limited upside

The 3 months correlation between Highlight and NVIDIA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of Highlight Communications i.e., Highlight Communications and NVIDIA go up and down completely randomly.

Pair Corralation between Highlight Communications and NVIDIA

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	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Highlight Communications AG  vs.  NVIDIA

Highlight Communications

Risk-Adjusted Performance

15 of 100

Solid

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.

NVIDIA

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days NVIDIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, NVIDIA is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Highlight Communications and NVIDIA

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

The idea behind Highlight Communications AG and NVIDIA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..