Correlation Between Hemisphere Energy and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both Hemisphere Energy and Highlight Communications 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 Hemisphere Energy and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hemisphere Energy Corp and Highlight Communications AG, you can compare the effects of market volatilities on Hemisphere Energy and Highlight Communications 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 Hemisphere Energy with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hemisphere Energy and Highlight Communications.
Diversification Opportunities for Hemisphere Energy and Highlight Communications
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hemisphere and Highlight is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Energy Corp and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and Hemisphere Energy 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 Hemisphere Energy Corp are associated (or correlated) with Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of Hemisphere Energy i.e., Hemisphere Energy and Highlight Communications go up and down completely randomly.
Pair Corralation between Hemisphere Energy and Highlight Communications
Assuming the 90 days trading horizon Hemisphere Energy is expected to generate 13.45 times less return on investment than Highlight Communications. But when comparing it to its historical volatility, Hemisphere Energy Corp is 6.62 times less risky than Highlight Communications. It trades about 0.1 of its potential returns per unit of risk. Highlight Communications AG is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 116.00 in Highlight Communications AG on October 6, 2024 and sell it today you would earn a total of 26.00 from holding Highlight Communications AG or generate 22.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hemisphere Energy Corp vs. Highlight Communications AG
Performance |
Timeline |
Hemisphere Energy Corp |
Highlight Communications |
Hemisphere Energy and Highlight Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hemisphere Energy and Highlight Communications
The main advantage of trading using opposite Hemisphere Energy and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hemisphere Energy position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.Hemisphere Energy vs. PNC Financial Services | Hemisphere Energy vs. SUN LIFE FINANCIAL | Hemisphere Energy vs. REVO INSURANCE SPA | Hemisphere Energy vs. Commercial Vehicle Group |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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