Correlation Between Highlight Communications and Xinhua Winshare

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

Diversification Opportunities for Highlight Communications and Xinhua Winshare

0.3

Correlation Coefficient

Highlight Communications  Xinhua Winshare

Weak diversification

The 3 months correlation between Highlight and Xinhua is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and Xinhua Winshare Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinhua Winshare Publ 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 Xinhua Winshare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinhua Winshare Publ has no effect on the direction of Highlight Communications i.e., Highlight Communications and Xinhua Winshare go up and down completely randomly.

Pair Corralation between Highlight Communications and Xinhua Winshare

Assuming the 90 days trading horizon Highlight Communications is expected to generate 5.31 times less return on investment than Xinhua Winshare. In addition to that, Highlight Communications is 2.38 times more volatile than Xinhua Winshare Publishing. It trades about 0.0 of its total potential returns per unit of risk. Xinhua Winshare Publishing is currently generating about 0.06 per unit of volatility. If you would invest  119.00  in Xinhua Winshare Publishing on December 1, 2024 and sell it today you would earn a total of  7.00  from holding Xinhua Winshare Publishing or generate 5.88% return on investment over 90 days.

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

Highlight Communications AG  vs.  Xinhua Winshare Publishing

Highlight Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Highlight Communications AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Highlight Communications is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Xinhua Winshare Publ

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xinhua Winshare Publishing are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Xinhua Winshare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Highlight Communications and Xinhua Winshare

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

The idea behind Highlight Communications AG and Xinhua Winshare Publishing 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 Transaction History module to view history of all your transactions and understand their impact on performance.