Correlation Between Highlight Communications and TERADYNE

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

Diversification Opportunities for Highlight Communications and TERADYNE

0.17

Correlation Coefficient

Highlight Communications  TERADYNE

Average diversification

The 3 months correlation between Highlight and TERADYNE is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and TERADYNE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADYNE 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 TERADYNE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TERADYNE has no effect on the direction of Highlight Communications i.e., Highlight Communications and TERADYNE go up and down completely randomly.

Pair Corralation between Highlight Communications and TERADYNE

Assuming the 90 days trading horizon Highlight Communications AG is expected to under-perform the TERADYNE. In addition to that, Highlight Communications is 1.31 times more volatile than TERADYNE. It trades about -0.07 of its total potential returns per unit of risk. TERADYNE is currently generating about 0.06 per unit of volatility. If you would invest  9,826  in TERADYNE on October 8, 2024 and sell it today you would earn a total of  2,460  from holding TERADYNE or generate 25.04% return on investment over 90 days.

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

Highlight Communications AG  vs.  TERADYNE

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.

TERADYNE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TERADYNE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, TERADYNE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Highlight Communications and TERADYNE

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

The idea behind Highlight Communications AG and TERADYNE 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.

Check out your portfolio center.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.