Correlation Between Highlight Communications and Cboe Global

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

Diversification Opportunities for Highlight Communications and Cboe Global

0.36

Correlation Coefficient

Highlight Communications  Cboe Global

Weak diversification

The 3 months correlation between Highlight and Cboe is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and Cboe Global Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cboe Global Markets 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 Cboe Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cboe Global Markets has no effect on the direction of Highlight Communications i.e., Highlight Communications and Cboe Global go up and down completely randomly.

Pair Corralation between Highlight Communications and Cboe Global

Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 2.02 times more return on investment than Cboe Global. However, Highlight Communications is 2.02 times more volatile than Cboe Global Markets. It trades about 0.06 of its potential returns per unit of risk. Cboe Global Markets is currently generating about 0.0 per unit of risk. If you would invest  103.00  in Highlight Communications AG on September 19, 2024 and sell it today you would earn a total of  11.00  from holding Highlight Communications AG or generate 10.68% 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.  Cboe Global Markets

Highlight Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Highlight Communications AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Highlight Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cboe Global Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cboe Global Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cboe Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Highlight Communications and Cboe Global

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

The idea behind Highlight Communications AG and Cboe Global Markets 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.