Correlation Between Highlight Communications and T MOBILE

Can any of the company-specific risk be diversified away by investing in both Highlight Communications and T MOBILE 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 T MOBILE 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 T MOBILE INCDL 00001, you can compare the effects of market volatilities on Highlight Communications and T MOBILE 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 T MOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and T MOBILE.

Diversification Opportunities for Highlight Communications and T MOBILE

0.46

Correlation Coefficient

Highlight Communications  T MOBILE

Very weak diversification

The 3 months correlation between Highlight and TM5 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and T MOBILE INCDL 00001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T MOBILE INCDL 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 T MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T MOBILE INCDL has no effect on the direction of Highlight Communications i.e., Highlight Communications and T MOBILE go up and down completely randomly.

Pair Corralation between Highlight Communications and T MOBILE

Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 2.74 times more return on investment than T MOBILE. However, Highlight Communications is 2.74 times more volatile than T MOBILE INCDL 00001. It trades about 0.2 of its potential returns per unit of risk. T MOBILE INCDL 00001 is currently generating about 0.09 per unit of risk. If you would invest  95.00  in Highlight Communications AG on October 11, 2024 and sell it today you would earn a total of  58.00  from holding Highlight Communications AG or generate 61.05% return on investment over 90 days.

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

Highlight Communications AG  vs.  T MOBILE INCDL 00001

Highlight Communications

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Highlight Communications AG are ranked lower than 16 (%) 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.

T MOBILE INCDL

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE INCDL 00001 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, T MOBILE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Highlight Communications and T MOBILE

The main advantage of trading using opposite Highlight Communications and T MOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, T MOBILE 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 T MOBILE will offset losses from the drop in T MOBILE's long position.

The idea behind Highlight Communications AG and T MOBILE INCDL 00001 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.